Although calculated in respect of past service, payment of all or part of a bonus may be deferred and made contingent on subsequent events, such as future profitability or continuing employment; this is especially appropriate if the business done is of a kind which cannot be reliably valued at the end of a year.
Individual bonuses can range from a few thousand to tens of millions of dollars, pounds or euros, payable in cash or less obvious forms including pension funds, shares, options, profit-shares and assets derived from the bank's transactions.
Of course, bonus policy is only one part of a bank's total remuneration and motivation structure which may include pay scales, promotions and reviews, share and option schemes, pensions, expenses, and benefits in kind.
One common practice is for the bank annually to make bonus awards to main board directors recommended by a board Remuneration Committee and also to declare a total bonus pool, which is then successively divided up and allocated between different departments and staff at each lower level at the discretion of an appropriate committee, director or manager, who will take account of individual rights and special cases.
At the most senior levels, directors and managers who are responsible for material parts of the bank's business may be entitled to an assessed share of the relevant profits, especially if their skills and contacts are readily transferable to competitors.
[10] In December 2013, the European Banking Authority issued a final draft regulation to determine who a "material risk taker" is, which was expected to take effect in the first half of 2014.
[13] On 20 November 2014, the Advocate General of the European Court of Justice (ECJ), Niilo Jääskinen, published his legal opinion that the EU cap was legitimate.
The financial community "talk of the City being a national asset and a success story; of having to pay football star salaries of necessity; and that any insistence that the banks accept that they have obligations as well as rights to bailouts will be met by an exodus of talented staff to other countries," he said.