Why was Nomura paying a £310k salary to a mid-ranking rates salesman?
Nomura's fixed income sales and trading business is not doing very well. In the first quarter of 2016, revenues there fell 76% compared to the previous year. Nonetheless, if figures from a contemporary court case are anything to go by, Nomura pays its fixed income markets professionals inordinately high salaries.
In most cases, salaries for senior vice presidents or executive director level staff in investment banks in London are around £220k max. Giovanni Lombardo, a former executive director in rates sales at Nomura, seems to have smashed that ceiling comprehensively.
Bloomberg reports that Lombardo, who left Nomura in May 2015 and is suing the Japanese bank for unfair dismissal, was paid a salary of £310k ($446k) during his last year there.
This looks high even by Nomura's standards. Salary data from pay benchmarking company Emolument.com suggests median salaries for director level traders at Nomura in London are £190k.
What made Lombardo so special?
Nomura declined to comment, but when we asked London headhunters they suggested a couple of hypotheses. Firstly, it's possible that Lombardo's 'salary' figure also includes a substantial fixed allowance to compensate for the EU bonus cap. Secondly, it's possible that Lombardo was on an elevated package because he came to Nomura from Lehman Brothers.
"A lot of these Lehman people were given high salaries and big guaranteed bonuses when they joined Nomura," said one headhunter, speaking off the record. "The guaranteed bonuses have now gone, but the high salaries remain."
If this is, indeed, the case, the question is clearly how many more ex-Lehman people are still earning above the odds at Nomura?
Alternatively, Bloomberg could have got their pay nomenclature confused and Lombardo's 'salary' may actually be his total comp. Insiders at Nomura say this is the most likely cause.