This Bank CEO Thinks Bonuses Are Baloney by Geoffrey Smith @FortuneMagazine November 25, 2015, 5:15 AM EST E-mail Tweet Facebook Linkedin Share icons Wait, what’s this? The head of one of the world’s biggest banks thinks bonuses are a waste of time? Deutsche Bank AG’s DB new CEO John Cryan has already broken a few taboos since he took over at Germany’s biggest and most prestigious bank, suspending dividends and slashing thousands of jobs in an effort to undo the damage done by generations of ill-advised empire-building. But at a speech in Frankfurt Tuesday, he went one further, attacking one of finance’s most cherished concepts–the bonus. “I have no idea why I was offered a contract with a bonus in it because I promise you I will not work any harder or any less hard in any year, in any day because someone is going to pay me more or less,” The Financial Times quoted Cryan as saying, adding–just in case there was any risk of misunderstanding–that he’s “never been able to understand the way additional excess riches drive people to behave differently.” For years, decades even, it’s been an article of faith on Wall Street that a big component of variable, performance-related pay has been essential to get the best out of employees. Before the 2008 crash, it wasn’t uncommon for the fixed component of senior bankers’ packages to be only 10% of their total remuneration. But the crash, and the ensuing revelations of mis-selling, insider trading and market-rigging have created a powerful body of evidence to suggest that the bonus culture had created a monster, encouraging reckless risk-taking and downright criminality among a few and jeopardising the global financial system in the process. Europe, in particular, has passed harsh new regulation since the crisis and now requires banks to get shareholder approval if they want to pay any staff a bonus bigger than their fixed salary. The E.U.’s banking watchdog also clamped down recently on the City of London’s attempts to sidestep that regulation by offering senior staff discretionary “allowances”. Cryan said that banks should rethink the structure of their pay deals to reflect longer-term priorities, saying that the current system put banks in the “ridiculous position where the baby’s been given the candy and you’ve got the difficulty of taking it away.” Cryan may have framed his criticisms as generalizations, but they are more likely to be directed at his own staff rather than any serious attempt to change the philosophy of the banking sector in general. Deutsche has one of the highest cost-income ratios in the sector–84.3% in the second quarter of this year. Even under Cryan’s recently-announced strategy, it will still be around 65% in five years’ time. Having announced last month that the bank will suspend dividend payments for two years, he is under pressure to share the financial pain around the bank’s high earners too.