Mutiny on the bounty

The Square Mile is bracing itself for a public outcry this winter when the investment banks announce their bonuses. Because a number of big players have gone out of business, the survivors have picked up the pieces and reaped rich rewards, with the Centre for Economic and Business Research forecasting that the City bonus pot will rise from £4 billion to £6 billion this year. The prospect of six- and seven-figure bonuses in the midst of a recession that was caused by the banks has triggered widespread hostility and led to threats of legislation from politicians. But are bonuses really wrong-headed? Should they be reduced or replaced? Who pays what to whom? And why?The modern company bonus goes back only about 30 years. Until then, staff and managers worked for a basic salary and, if they helped their organisation to prosper, they were promoted or given pay rises. Jonathan Trevor, lecturer in HR at Judge Business School, Cambridge, says that the evolution from a simpler form of capitalism to the modern market economy prompted the rise of the executive bonus.