Deferred awards: Staff who are essential to the bank’s recovery and who might otherwise be at serious risk of leaving, and who remain with the Bank will receive a deferred award for 2008. The deferred award will be released in three equal annual instalments beginning June 2010 and payable in sub-ordinated debt of RBS i.e. not in cash.
Some bond investors have been suggesting to get involved in banking capital structure above where the govt is invested. Still, investors are worried - as they should be - and yields are now 20% on banking pref stocks. Now employees are also becoming involved in the capital structure.
The more constituencies get involved in the capital structure, the more complex this entire nationalization issue becomes. Can the govt. come back and tell employees to zero their debt in 2010? The argument that employees have nowhere else to go won't remain true forever.