What Gordon Brown's G20 bonus letter really says

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Gordon Brown is getting fraternal with Nicholas Sarkozy and Angela Merkel. Overcoming differences in language and philosophy, they've penned a letter to Frederik Reinfeldt, the Swedish prime minister and EU president, setting out their jointly held bonus beliefs ahead of the G20 meeting.

The letter is a masterpiece in diplomatic doublespeak. We have therefore translated it into plain English.

· While cyclical indicators point to economic stabilization, the crisis is not over and the labour markets will suffer the consequences of low capacity utilization over the months to come.

Translation: 'Unemployment is going to get a lot higher (and bankers will be blamed).'

· 'The abatement of financial tensions has led some financial institutions to imagine they can return to the same modes of action prevalent before the crisis. This is not an option.'

Translation: 'Banks are paying large bonuses again. We don't want them to..

· 'Our citizens are deeply shocked at the revival of reprehensible practices, despite taxpayers' money having been mobilized to support the financial sector at the height of the crisis.' '

Translation: 'As unemployment rises, envy of financial sector pay and resentment of taxpayer assistance will get worse. As politicians we want to tap into this.'

· 'We should improve governance: Compensation committees involving the board and the staff including risk controllers should be set up with a view to designing and further developing compensation policies'.

Translation: 'We fully agree with the FSA's remuneration rules.'

· 'The variable remuneration including bonuses, should be kept at an appropriate level in relation to the fixed remuneration and must depend on the performance of the bank, the business unit and the individuals.'

Translation: 'We are in agreement with banks' existing bonus policies, but would like salaries to be a higher proportion of the total package.'

· When stock options or stocks are received as part of the compensation, they should not be exercised or sold for an appropriate period of time.

Translation: 'We agree with banks' existing treatment of stock and options.'

· The variable remuneration must take due account of negative developments. This means that guaranteed bonuses are to be avoided.

Translation: 'Having said that we approved of guaranteed bonuses for up to one year, we'd now like to do away with them altogether.'

· 'The payment of a major part of significant variable compensations must be deferred over time for an appropriate period and could be cancelled in case of a negative development of the bank's performance.'

Translation: 'We are all for clawbacks.'

· The G20 should transform the above principles into binding rules for financial institutions with sizable complex and risky business activities and ensure that there are sanctions at national level for banks that do not play by these rules.

Translation: 'We are not happy with the namby pamby principles based approach advocated by the FSA. We also want to disadvantage large banks and encourage business into smaller players and hedge funds.'

· We should explore ways to limit total variable remuneration in a bank either to a certain proportion of total compensation or the bank's revenues and/or profits.

Translation: 'We'd like to cap bonuses as a percentage of revenues and profits, but are waiting to see whether Obama the rest of the G20 approve.'

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