(article published in The Australian)

Excerpt from Original Article

THE lucrative bonuses paid to millionaire Macquarie Group bankers will be slashed as the bank tries to drive up its flagging share price during the global financial crisis.

The bank, nicknamed the "Millionaire's Factory" for the number of well-paid executives it employed, revealed it would change its remuneration policy as profits at the bank were expected to halve.

The shift will mean chief executive Nicholas Moore and the bank's major deal-makers will have the cash component of their bonuses cut and be given more direct Macquarie shares as an incentive

to arrest the bank's share price decline.

Under the current deal, Macquarie staff are paid a "retained" bonus that is kept by the bank and paid once performance hurdles are met, but now a greater portion of that will be held over.

The homegrown investment bank was one of the stocks in the race to become Australia's first $100 share, but has fallen by more than 60 per cent in the past year.

Last year, Mr Moore was paid a direct cash bonus of $18.7 million. He also received an extra $5.35million, but that amount was paid out over a number of years as part of last year's $26.7 million pay cheque.

Mr Moore's overall payment was down from the $32.8 million he earned in the previous year, but most experts believe the Macquarie bank boss will take a sizeable pay cut this year.

The bonuses paid to the top staff could be more than halved as Macquarie links its lucrative bonuses to profit predicted to drop from $1.8 billion to $900 million.

The size of the bonus pool has been steadily falling at Macquarie. There was a 48 per cent drop in its salary payments to staff in the lead-up to September last year.

The Macquarie wages bill for the past full year was $3.72 billion for its 13,000-strong global workforce, but in the first half of this year it was savagely cut back to $1.1 billion.

Macquarie said the bonus change was in line with the current trend among investment banks to pare back sizeable salaries during the economic crisis. "(The) announced changes to the group's remuneration arrangements are consistent with global remuneration and regulatory trends," the bank said in a statement.

Rival bank UBS's star Australian bankers were not paid a bonus at all after the Switzerland-based parent bank had to be bailed out by the Government.

The Macquarie bonuses are paid by early July, and during the bull market run were linked to a boom in Sydney's eastern suburbs real estate market because of the huge payouts.

The Macquarie changes come as Labor plans to crack down on "golden handshakes" paid to executives when they leave companies.

Former Macquarie boss Alan Moss left the bank with an $80million cheque, on top of earning $26.7million in his final year.

Under the planned changes ordered by the Macquarie board, the bank's group of nine most senior executives will receive a lower cash payment and extra top-up payments that will be held back for between three and seven years.

The move is aimed as an incentive to improve the performance of the bank in the next few years.

The executive directors will also receive the "retained" part of their bonus automatically invested in Macquarie shares.

Remuneration expert Greg Brogan, the managing director of Executive Pay Systems, said corporate boards were now keen to link bonus and salary payments to the performance of executives.

"I think bonuses are going to start to fade away in the longer term."