From the FT:
Bob Diamond the incoming chief executive has announced plans to use innovative bonds - so-called contingent convertibles, or cocos-to pay a large portion of bonuses for more than 1,000 bankers, those ranked at managing director level and above. Issuing a large portion of bonuses in cocos would mark a significant departure for investment banks, which have focused instead on increasing the amount of share-based and deferred pay awarded to their highest earners. Cocos are bonds that convert into equity in times of stress, making them appealing to regulators because they act as capital buffers and to banks because they do not dilute shareholders upfront. Analysts expect Barcap to set aside about £5bn in pay for investment bankers, of which under half would be in bonuses.
