Five things you need to know about the EU’s bonus cap

1. The plan: To limit the bonuses that can be paid to bankers to the level of their salary. Any higher bonus would need the approval of shareholders (65 per cent of votes cast if a quorum of 50% of shareholders is reached; 75 per cent of votes cast otherwise) and a quarter of it would have to be deferred for five years — and even then the bonus could not exceed double the salary.

2. Where does the proposal come from? The European Parliament. MEPs insisted on the cap to be included in a package of banking reforms. Initially, they wanted simply wanted to cap bonuses at the level of salaries, but after negotiations with the European Commission and Ireland (as Presidency of the EU, on behalf of the member states) a compromise was reached last week including the possibility of bonuses worth twice as much as salaries. On Tuesday, the finance ministers of 26 of the 27 EU member states voted