Global banks hiking salaries, slashing bonuses: Mercer
11 Jan 2010
According to a survey by US-based global consultancy firm Mercer most banks have hiked basic salaries and cut bonuses for executives in response to calls for leaner compensation packages after the financial crisis.
Of the 61 banks and other financial firms that responded to a survey, fourth fifth said they had made changes to annual bonuses and short term incentives or were planning changes.
Around 65 per cent of banks had increased basic salaries and 88 per cent decreased the weighting of bonuses in their compensation mix, the study said.
Banks have come in for criticism for rewarding excessive risk-taking with generous bonuses and fostering a short-term culture that led to the financial meltdown.
While only 41 per cent of the respondents said they had significantly limited one-year bonus guarantees for executives, 64 per cent said they had done so for multi-year bonus guarantees.
According to Mercer 57 per cent of the respondents said that they had already put in place bonus caps or limited their bonus pools while 42 per cent had eliminated 'golden parachutes' or guaranteed payouts to executives if they were sacked – a practice more common in the insurance sector than in banks.
