Publicação
CEOs’ compensation in the global systemically important banks
| Resumo: | This study assesses the impact of bank’s characteristics, particularly, risk, profitability, and firm size, in compensation for Chief Executive Officers (CEOs) in the Global Systemically Important Banks. We analyze the impact of the implementation of the Financial Stability Board’s (FSB) Principles and Standards for Sound Compensation (P&S) in CEO compensation. Thus, we try to answer a set of questions. Has the regulation on CEO compensation been successful? Do we observe a decrease in the sensitivity of their compensation to short-term performance? Do we see an increase in the sensitivity of compensation to risk? Our model is estimated with data on 35 banks from 13 countries during 2011, 2014, and 2017. We find that the sensitivity of CEO variable compensation concerning risk is significantly more (negatively) correlated during the period between 2014 and 2017 for the variable Nonperforming Loans Ratio. CEO variable compensation’s sensitivity has been less positively correlated with shortterm performance only during the period between 2011 and 2014. These conclusions indicate that the changes in compensation practices are not totally in line with the P&S. There is an inconsistency of results between the risk variables and the variable compensation. The Nonperforming Loans Ratio has a negative relationship, and the Stock Returns Volatility has a positive relationship, which may indicate that the transmission of the accounting information to the market may not be the most adequate. Lastly, the firm size, measured by Total Assets, is negatively correlated with CEO variable compensation. |
|---|---|
| Autores principais: | Andrade, Sara Moreira |
| Assunto: | Banks Compensation Regulation Supervision Banca -- Banking Remuneração Regulamentação Supervisão |
| Ano: | 2020 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | ISCTE |
| Idioma: | inglês |
| Origem: | Repositório ISCTE |
| Resumo: | This study assesses the impact of bank’s characteristics, particularly, risk, profitability, and firm size, in compensation for Chief Executive Officers (CEOs) in the Global Systemically Important Banks. We analyze the impact of the implementation of the Financial Stability Board’s (FSB) Principles and Standards for Sound Compensation (P&S) in CEO compensation. Thus, we try to answer a set of questions. Has the regulation on CEO compensation been successful? Do we observe a decrease in the sensitivity of their compensation to short-term performance? Do we see an increase in the sensitivity of compensation to risk? Our model is estimated with data on 35 banks from 13 countries during 2011, 2014, and 2017. We find that the sensitivity of CEO variable compensation concerning risk is significantly more (negatively) correlated during the period between 2014 and 2017 for the variable Nonperforming Loans Ratio. CEO variable compensation’s sensitivity has been less positively correlated with shortterm performance only during the period between 2011 and 2014. These conclusions indicate that the changes in compensation practices are not totally in line with the P&S. There is an inconsistency of results between the risk variables and the variable compensation. The Nonperforming Loans Ratio has a negative relationship, and the Stock Returns Volatility has a positive relationship, which may indicate that the transmission of the accounting information to the market may not be the most adequate. Lastly, the firm size, measured by Total Assets, is negatively correlated with CEO variable compensation. |
|---|