The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Thu, 21 May 2026 20:45:50 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Promising Steps on Bank Pay Reforms – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Promising Steps on Bank Pay Reforms https://corpgov.law.harvard.edu/2011/05/01/promising-steps-on-bank-pay-reforms/?utm_source=rss&utm_medium=rss&utm_campaign=promising-steps-on-bank-pay-reforms https://corpgov.law.harvard.edu/2011/05/01/promising-steps-on-bank-pay-reforms/#comments Sun, 01 May 2011 12:15:33 +0000 http://blogs.law.harvard.edu/corpgov/?p=17632?d=20110501081533EDT Editor’s Note: Simon Wong is a Partner at Governance for Owners, an Adjunct Professor of Law at the Northwestern University School of Law, and a Visiting Fellow at the London School of Economics and Political Science. This post is based on an article that recently appeared in the Butterworths Journal of International Banking and Financial Law, which is available here. The Program on Corporate Governance has published several recent papers on pay at financial institutions, including How to Fix Bankers’ Pay, The Wages of Failure: Executive Compensation at Bear Stearns and Lehman 2000-2008, and Regulating Bankers’ Pay.

Despite greater regulatory oversight and smaller payouts, compensation in the financial sector continues to attract scrutiny and criticism. Yet, an examination of pay reforms at some banks suggests a strengthening alignment of interest among executives, their firms, and wider society.

First, owing to new regulations, a greater proportion of bankers’ pay is exposed to longerterm performance outcomes of their firms. Last December, the Committee of European Banking Supervisors (‘CEBS’) finalised rules requiring 40-60 per cent of executives’ variable pay to be deferred for three to five years and at least 50 per cent of it to be in stock. Equally, CEBS regulations limit upfront cash payments to 20-30 per cent of total remuneration.

Although US regulators have historically been reticent to regulate executive pay, the Federal Deposit Insurance Corporation is proposing to introduce similar requirements at US financial institutions.

(more…)

]]> https://corpgov.law.harvard.edu/2011/05/01/promising-steps-on-bank-pay-reforms/feed/ 1