It’s not always the easiest thing in the world to lose the job but keep the bonus. Unlike Andrea Orcel, Jes Staley has “good leaver” status from Barclays, meaning that, if everything goes to plan, corporate targets are met and there are no more unpleasant surprises, he will get a total of 11 million Barclays shares. How did he manage this?
Obviously, Jes meets the key criterion for being considered a good leaver – he’s not going to the competition. But this is never the full story when it comes to good leaver decisions; there’s always some flexibility in both directions. And the Barclays board might reasonable have felt that they owed him.
Because he’s had a run of really bad luck with bonuses ever since joining the firm at the end of 2015. Barclays had to pay £2m to buy him out of a JP Morgan long term scheme, but he more or less immediately bought £6m of Barclays shares at 233p, a price which they only briefly rose above in 2017 and which would leave him with a 16% loss if he sold them today. He got a bonus of less than £1m in 2018, as well as having to pay a £624,000 fine for trying to interfere with the whistleblower program. He had a better year in 2019, but then the pandemic struck and he joined the other UK bank CEOs in donating his payout to charity.
When you compare this series of unfortunate events to Staley’s achievements on the other side of the ledger, the contrast is pretty stark. Although the share price hasn’t done much, he’s delivered strong enough results to see off the activist investors and bring Barclays back to the status of a credible player in investment banking. In fact, he’s done a lot better for other people’s bonuses than he seems to have achieved for his own.
Of course, it could reasonably be argued that Jes has been in great measure the author of his own misfortunes – it was one of the all time dumb moves to try and use the bank’s security team to identify someone who had anonymously criticised one of his friends. And although the report apparently clears him of having had any knowledge of Jeffrey Epstein’s crimes, the reason he’s leaving Barclays today isn’t simply bad luck.
But Barclays knew what kind of a character they were getting when they hired him. He’s always been mercurial, impulsive and prone to act out of really badly thought out personal loyalties; on the other hand, he seems to inspire similar loyalty and confidence in others, and it’s hard to fault his strategic calls with respect to Barclays’ business over the last five years, although many have tried. Jes Staley didn’t need to leave his hedge fund; he did so on the basis of a long term plan. Since he delivered on his side of the bargain, it would have been churlish in the extreme for Barclays to try to wriggle out of theirs.
Elsewhere, sometimes you can forecast trends in the banking industry simply by tracking buzzwords. A couple of years ago “activist defense” was one of the hottest hiring categories, as banks beefed up their advisory practices for companies wanting to fight off activist shareholders. More recently, data science became the new thing, with semi-related PhDs able to name their price. At the moment, of course, ESG is where it’s at.
The thing is, the streams are combining. UBS now has an activist defence data science product, called “GUARDIAN”. The hedge fund Engine No.1 has successfully combined shareholder activism with ESG, and forthcoming changes to proxy regulations means it’s likely that we’ll see that happening a lot more. Surely this means that before long, we will see jobs advertised for professionals in ESG Activist Defense Data Science?
This might trigger the Buzzword Event Horizon, the phenomenon hypothesised by theorists where a banking job becomes so incredibly fashionable that it’s possible to quit it and found a fintech startup before you’ve even completed the interview. If anyone’s actually doing such a cool job, please let us know.
The headline moves at Credit Suisse: closing prime broking, shifting capital out of the investment bank. (Financial News)
It’s always worth remembering that seemingly incomprehensible discrimination lawsuits in the UK – in this case, the court was asked to decide if being invited to Nandos was a racial slur – are often due to the cap on employment tribunal awards in ordinary cases, making it not worth bankers’ while to pursue an action unless they can find a discrimination angle. Commerzbank won this case, with the judge ruling that if someone regularly says they like fried chicken, later restaurant suggestions are likely to be seen in this context rather than racial stereotypes. In any case, Nando’s serves grilled chicken. (Daily Mail)
Keep your friends close, your enemies closer but your “frenemies” closest of all. Psychological studies show that colleagues with whom you have a love-hate relationship are more likely to help you when you’re working together, but also to spread rumours about you when you’re not there. (BPS Digest)
Senior bankers and other business leaders are losing their exemptions from the Hong Kong coronavirus quarantine regulations and they fear that this, rather than anything else, may damage the future of the city as a financial hub (BBC)
“The game isn’t as sexy as it used to be”. Old timers on government bond desks look forward to the end of Fed purchases and a market in which rates trading was more exciting. (Bloomberg)
A bidding war is developing for corporate finance law firm associates rather like the junior banker escalation – recruiters are already taking calls ahead of “resignation season” and bonuses are being described as likely to be “meaty”. (Financial News)
Count your blessings and thank your lucky stars that you work in finance, and not in an industry where borrowing a van or being given a modelling makeover constitutes a bonus. (WSJ)
If your head doesn’t spin at the headline “Shiba Inu Whales With Billions Hounded By Crypto Detectives”, you’re probably already at least slightly aware of the suddenly hot new token; here’s an investigation into who might be behind it. Full of people claiming that “this is basically no different from Wall Street” (Bloomberg)
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