Global Banks Claw Back Bonuses
24 August 2012 (PLANSPONSOREurope.com) - Global banks are clawing back bonuses from staff, according to research from Mercer.
Mercer’s Financial Services Executive Compensation Snapshot Survey, which looks at compensation structures in 63 global financial services companies, including banks and insurance firms, shows that 14% of global banking organizations have ‘clawed back’ compensation payments made to employees while a further 3% of organisations have reclaimed the payments but have yet to receive the pay back.
Clawbacks, where paid-out compensation is reclaimed based on financial restatement, gross negligence or other malfeasance, are a common feature in bank compensation structures today. Their inclusion has been encouraged by regulators in Europe and North America as a means of managing employee risk-taking following the financial crisis of 2008.
Vicki Elliott, Global Financial Services Human Capital Leader at Mercer, said: “There are a variety of reasons why actual clawbacks of payments already made are limited – often the concept conflicts with local labour laws so actually recouping the funds can be difficult.
“Clawbacks are relatively new phenomena in compensation programs so it will take some time for them to bed down. A small number of clawbacks doesn’t signify that the sector is ignoring lessons from the financial crisis but does raise legitimate questions about whether companies will actually seek pay-back of compensation paid.”