Morning Coffee: French bank MD's terrible tantrum over his $420k bonus. Reasons to code in OCaml
It's a known thing that when you are told your bonus in an investment bank, you should not smile. Any expression of gratitude could be interpreted as a license to pay you less the following year. Impassivity is the best policy, but if your bonus really is a lot lower than expected, a memorable assertion of your disappointment might also make a difference when your bonus is decided the next time around.
Fabio Filippi, an Italian senior salesman at BNP Paribas appears to have gone for asserting disappointment option in March 2017 when he was informed that his bonus was €400k ($420k at the then exchange rate). Precedent was the problem: Filippi's bonus had been €625k in 2014 and €540k in 2015. Receiving a €400k bonus for 2016 was another big drop, and Filippi made sure that his managers registered his discontent.
Recently released court documents relating to his subsequent dismissal say that Filippi was infuriated by what he saw as his diminutive payment. He referred to it as a "mere" €400k. He shouted. He said he was being treated unfairly because he was neither French nor based in Paris. He said he was the best manager among his peers. He said he could get a new job in a matter of days if he wanted to. Then he left without saying either “goodbye” or “thank you.”
If this is the way to extract a higher bonus the next time, it doesn't seem to have worked. Instead, it seems that Filippi's outburst simply nudged him further down the path towards dismissal. As the head of distribution retail sales for Italy, he'd been a high performer and had been onto a good thing. - When he was relocated to Milan in December 2013, he'd been given a salary higher than his boss and 80% of his housing costs had been paid compared to the 50% that was standard at BNP Paribas at the time. But his performance had been slipping.
Filippi wasn't technically an MD, but he managed a team of nearly 20 people and was the equivalent of an MD at most banks. In 2013, his performance had been rated as "3" or above expectations, but his individual contribution to team revenues had been rated as "5" (below expectations) on the grounds that he'd failed to originate any primary trades himself. By 2016, he was rated overall as 4 (meets expectations) and although he was being praised for his skills at delegating, the bank was less happy with his own client relationships or the way he was managing the team and delivering feedback. In the months that followed, a "talented junior" resigned after claiming that Filippi consistently ignored his concerns about the content and evolution of the job. And a senior staff member expressed dissatisfaction with Filippi's management methods.
There were other issues. Filippi raised concerns internally about the use of an intermediary to sell certificates to private Italian investors, arguing that they were "rogue agents" and that the commissions paid were “in breach of current regulation and legal obligations.” When he went to Italy, Filippi discovered that he was taxed on deferred cash bonuses awarded in the UK both in Italy and in the UK, such that BNP was compelled to lend him the money to cover the new obligations. When the bank tried to recover the money in 2016, Filippi was depressed and took eight weeks off work.
Ultimately, the court found that BNP let Filippi go after deciding that "his role in the team no longer made sense from a business perspective." Although Filippi had used his bonus tantrum to claim that he could find a new role immediately, he was initially given six months to find a new job and then asked for 12 to 18 months because he said six months was not enough. However, BNP was then compelled to repatriate him from Italy (to avoid high Italian redundancy pay) and it was nine months before Filippi was finally ejected in February 2018.
Filippi's LinkedIn account suggests he hasn't worked in banking since. Instead, he's now running a holiday lettings business in London, Ibiza and Verbier. His website says he, "met his destiny leaving his banking career." Instead of complaining about his bonus, he's putting his energy to better use elsewhere.
Separately, data from eFinancialCareers suggests you probably won't find a job as a developer in financial services if you can code in OCaml. But if you're very lucky, you might find a job at Jane Street.
In a long and interesting post on his blog, writer and researcher Bryne Hobart looks at what Jane Street does and why OCaml is its chosen coding language. "OCaml's design requires programmers to be very explicit about what data they're using and what they're trying to do with it," says Hobart. "Excel is happy to tell you that the square root of today's date is 2:22pm on July 29th, 1900; OCaml will insist that you figure out what you meant to take the square root of first."
This is good because it means that bugs are ironed out before code goes live. When code "explicitly declares types also has a form of documentation that's automatically audited by the compiler—you can predict often that the code will do what it says because if it doesn't do that, it won't do anything" says Hobart.
There are second order benefits for Jane Street, too. An ability to code in OCaml is an easy way of filtering new hires. And anyone who's any good at OCaml is likely to end up working for Jane Street, because it pays so much ($245k for graduates last time we looked) and is in a position to outbid all rivals.
Meanwhile...
Credit Suisse gave out $300m of retention bonuses in one month. (Bloomberg)
Bank of America seems to be paying analyst bonuses that are 75%-100% of base salaries. (Financial News)
Jefferies has an $80m fine for illicit messaging by staff. (Bloomberg)
As Barclays repurchases US structured notes relating to its accidental sale of $15bn of unregistered securities, some investors are making big profits. A $1.8m note issued by Peloton interactive is currently trading at just 8 cents on the dollar and if Barclays buys it back now, sellers could make 1,200% more than its current value. (Bloomberg)
"I learned of the concept "don't be a hero". If the work only can be done by doing weekends/late nights, the system is flawed. If you do it, then you are hiding the underlying flaws, which will not fix the problem. Sticking to a reasonable working load is key." (Twitter)
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