It's Word of the Year season again, and a dark-horse candidate is surging on the inside turn to the home stretch: malus. (OK, well, it appeals to me at least — my poor past record in predicting WOTY choices suggests that my lexical tastes are in the minority.) A press release from the Union Bank of Switzerland, dated 11/17/2008, explained that "[b]eginning in 2009, UBS will adopt a new compensation model for the Board of Directors and the Group Executive Board", according to which
Variable cash compensation for the Group Executive Board is based on a bonus / malus system.
This has struck a chord in the news media, which responded with more than 1,200 stories mentioning "malus" in the week since that press release (only a few of which deal with the apple genus).
In Latin, malus was an adjective meaning (according to Lewis & Short) "bad, evil, wicked, injurious, destructive, mischievous, hurtful, ill-looking, ugly, deformed, " etc., parallel to bonus meaning "good".
According to the OED, English bonus, meaning "A boon or gift over and above what is normally due as remuneration to the receiver", has been in use since the late 18th century:
1773 C. MACKLIN Man of World III. i, Got my share of the clothing..the contracts, the lottery tickets, and aw the political bonuses.
1802 Edin. Rev. I. 104 The bonus of one half per cent. interest will not mend the matter.
1808 SCOTT in Lockhart (1839) III. 134 The Editor..makes a point of every contributor receiving this Bonus.
In contrast, malus in the corresponding negative sense is not in the online OED yet at all. However, it's not a brand-new borrowing: there's a Wikipedia article on the "Bonus-malus system" in insurance, with a reference to a 1995 book, Jean Lemaire, "Bonus-malus Systems in Automobile Insurance". The book in turn makes it clear that the term had already been in use for some time as of 1995.
(Latin mālus with a long /a/ meant "appletree", which has altogether the wrong associations for a negative compensation increment. The Latin for "apple" was mālum, although the modern genus name, confusingly, is malus.)
Kevin Conor, who sent me a link to the UBS press release the day after it appeared, noted that
Basically UBS is withholding 2/3 of executives' cash bonuses in escrow for several years, and the bonuses will be subject to clawbacks (the malus) if the firm's performance fails to meet certain targets. This doesn't actually address the problems with investment banking incentive structures (all it does is mimic the economics of option grants that take time to vest, an already widely used method of executive compensation), but it does give people an ugly new word to talk about.
The Anglo-Saxon compound clawback doesn't combine so euphoniously in a package with bonus, so that the (apparently newer) borrowing or analogical formation is useful. The OED's earliest citation for clawback in the financial sense of "retrieval, recovery" is from 1969, but the lack of quotes or explanation in the citation suggests that it was already an accepted term then:
1969 Daily Tel. 16 Apr. 24/4 It is..necessary to adjust the claw-back for 1969-70 so as to reflect the fact that the 3s extra on family allowances..will be paid for a full year in 1969-70.
It's logical to expect bad puns based on the homophony of "malus" and "malice", and sure enough, Andrew Hill in the Financial TImes (or the editor who wrote his headline) obliged on 11/18/2008 with "Malus aforethought". (For some notes on the origins and subsequent adventures of "malice aforethought", see this old LL entry.)
[Update: the Dictionnaire de l'Académie Française has this entry:
(1)*MALUS (s se fait entendre) n. m. XXe siècle. Emprunté du latin malus, « mauvais ».
Augmentation de prime qu'une compagnie d'assurances impose au conducteur responsable d'un ou plusieurs accidents (par opposition à Bonus).
which doesn't tell us more about the history than we already knew from the 1995 book citation.
A bit of further search turns up a 1985 book (Jean Lemaire, Automobile Insurance) that also assumes "bonus-malus system" as a well-established piece of terminology:
As is done everywhere in the world, we are going to build up a bonus-malus system exclusively based on the number of accidents reported to the company (and not on their amount). [p. 129]
Florent de Vylder et al., Premium Calculation in Insurance, 1984, says
The introduction of the Bonus Malus system in Belgium took place around 1970. [p. 119]
A search of Google Scholar turns up Jean Lemaire, "How to define a Bonus-Malus system with exponential utility function", ASTIN Bulletin 10 274-282, 1979. (And Don Campbell, in the comments below, gives an ASTIN citation that takes it back to 1967.)
All this raises the question of whether and when malus came to be used by itself, outside of phrases like "bonus-malus system", as in "I hear that this year's maluses will be even bigger than last year's".