Covid-19 pandemic may eat into bonuses of domestic investment bankers

Increments, on the other hand, are likely be shelved altogether considering the bleak outlook for fundraising in FY21

The coronovirus pandemic is likely to put a cloud on the bonuses to be received by domestic investment bankers this year. Based on the deal activity, experts reckon that the bonuses could have ranged between 30-60 per cent of annual salaries for 2019-20 (FY20). The actual payouts — to be doled out by the end of this month or the next — may be a lot lower as banks look to conserve cash in an uncertain environment. Increments, on the other hand, are likely be shelved altogether considering the bleak outlook for fundraising in FY21.

Bonuses for foreign bankers, however, have not been impacted by the current pandemic. That’s because these banks typically follow a calendar year cycle and were handed out their variable pay in January or February, much before the impact of the pandemic became clear. “The overall bonus pool for domestic banks may shrink this year as investment banks would want to conserve capital in the backdrop of the coronavirus pandemic,” said Pranav Haldea, managing director, PRIME Database. Last year, bankers took home 30-50 per cent of annual pay as bonuses, far lower than the 100-200 per cent they pocketed in the year before. The sky-high bonuses for FY18 correlated with the record fundraising by way of IPOs and QIPs that year.

Bonuses are typically commensurate with deal activity in any given year and the fees earned. The kind of deals the bankers were a part of and the role they played are also a deciding factor. Banks, on average, pocket 2-3 per cent as fees for managing IPOs and 1.5-2 per cent for handling QIPs. Buybacks fetch Rs 1-2 crore per deal. Fees vary depending on the issue size and the number of bankers managing a deal…Read More

Infosys vs founders: Full text of Murthy's letter on COO Rao's pay hike

I recruited Pravin in 1985 and nurtured him throughout my stay at Infosys since then, says Murthy

Infosys founders, led by N R Narayana Murthy, on Sunday criticised the proposed salary hike of Chief Operating Officer (COO) Pravin Rao, deepening the rift between them and the board of the country’s second-largest software exporter on governance issues.

Here is the full text of Murthy's letter explaining his stand on COO Pravin Rao's pay hike

Dear Folks,

I have lots of affection for Pravin. Let me state you the facts.

I recruited Pravin in 1985 and had nurtured him throughout my stay at Infosys since then.

He had been sidelined. He was not even a member of the Executive Council at Infosys in 2013 when I came back. Kris, Shibu snd I encouraged him, elevated him to the board, and made him the COO when we recruited Vishal as the CEO. So, this abstention has nothing to do with Pravin.

Those of us who have always stood for fairness in compensation and practised it, right from the day Infosys was founded, will have to demonstrate it when needed. This is a time when it is needed. Nothing more and nothing less.

I believe in striving towards reducing differences in compensation and equity in a corporation. You may not know that my Infosys salary at the time of the founding of Infosys was just 10% of my salary in my previous job. I ensured that my younger, co-founder colleagues got 20% higher salary over their salaries in their previous job even though I was 7 levels above them in my previous job and was 11 years older than them. I gave them huge equity compensation the like of which has never been replicated in this world. So, this abstention comes from somebody who has walked the talk.

I have always felt that every senior management person of an Indian corporation has to show self restraint in his or her compensation and perquisites. He or she has to fight for maintaining a reasonable ratio between the lowest salary and the highest salary in a corporation in a poor country like India. The board has to create a climate of opinion for such a fairness by their actions.

This is necessary if we have to make compassionate capitalism acceptable to a majority of Indians who are poor. Without compassionate capitalism, this country cannot create jobs and solve the problem of poverty. Experts tell me that capitalism may come to an end in the not-so-distant future if the current corporate leaders do not heed this advice in India...(READ MORE_)