Basel wants banks to link pay to performance

Global banking supervisors tackling thorny issues such as bonuses yesterday said banks should disclose how an individual's pay is linked to the firm's performance, including longer-term profitability.

Under new proposals, banks would disclose qualitative and quantitative information about their remuneration practices, the Basel Committee for Banking Supervision said in a consultative document.

"The committee believes that these additional … requirements on remuneration will support an effective market discipline and will allow market participants to assess the quality of the compensation practices and the quality of support for the firm's strategy and risk posture," it said.

Banks would also need to disclose the number and total amount of guaranteed bonuses paid and the total amount of outstanding deferred compensation.

Comments on the document can be submitted up until 25 February.

Last week, Goldman Sachs established a new long-term bonus plan that lets the board award cash and shares on top of existing compensation, but lets the firm take back money if the employee takes too much risk.

It is intended to reward executives if the bank performs well long term, and ensure the firm does not take imprudent risk.