Promising Steps on Bank Pay Reforms

Butterworths Journal of International Banking and Financial Law, April 2011

1 Pages Posted: 12 Apr 2011 Last revised: 19 May 2011

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2011

Abstract

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

Wong, Simon C. Y., Promising Steps on Bank Pay Reforms (April 1, 2011). Butterworths Journal of International Banking and Financial Law, April 2011. Available at SSRN: https://ssrn.com/abstract=1806795

Simon C. Y. Wong (Contact Author)

Northwestern University School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

London School of Economics

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/collections/law/staff/simon-wong.htm

Tapestry Networks ( email )

404 Wyman St.
Suite 225
Waltham, MA 02451
United States

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