Financial Times, March 14, 2011
2 Pages Posted: 15 Mar 2011 Last revised: 20 May 2011
Date Written: 2011
The way some financial institutions are implementing compensation reforms suggests a strengthening alignment of interest among executives, their firms, and wider society.
First, through mandatory deferral, payment in equity, and other mechanisms, bankers’ pay is more exposed to longer-term performance outcomes of their firms. Second, performance and payouts are increasingly evaluated through a multi-year lens. Third, risk considerations are now better incorporated into compensation arrangements.
Although problematic remuneration practices remain, the progressive steps taken by some banks provide a reason for optimism that their compensation arrangements will not pose the same danger to systemic stability as in years past.
Keywords: Compensation, Financial Institutions
JEL Classification: G28, G29, G34, M52
Suggested Citation: Suggested Citation
Wong, Simon C. Y., Some Banks’ Pay Reform May Show the Way (2011). Financial Times, March 14, 2011. Available at SSRN: https://ssrn.com/abstract=1784772