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In the light of the global financial crisis, discuss how the remuneration of chief executives of banks should be determined. - Essay Example
Author : christy01
Finance & Accounting
Pages 4 (1004 words)
Remuneration of Chief Executives during Crisis Introduction During the recent global financial crisis many banks’ clients were faced with inevitable foreclosures. Such foreclosures also affected customers’ savings thus resulting in a terrible credit crunch…
In the U.S, for example, this was followed by acquisition of properties from defaulters. Despite a given financial situation, the banks’ chief executives have always enjoyed a constant pay through basic salaries and bonuses. Their positions have been secured by tenures and extensive pension plans. The banks have defended such payments as a way of protecting the interest of the bank by ensuring that they beat the competition for CEOs in the country. It is this unfounded huge salaries and allowances to CEOs despite financial situation, global or local, that needs to be reviewed. Such review should assist in ensuring that banks do not incur unnecessary expenditure when they should be recording increased investments and value for the shareholders. This paper will look into various ways that the remunerations of the chief executives of banks can be determined. In drawing up the analysis, various factors that add up to their pay such as pensions, office tenure, bonuses and gross salary will be looked into. Components to Be Monitored In determining the total remuneration of a CEO, various components should be given consideration. Such components are given priority owing to the fact that they motivate better performance by the CEO come the following financial year. They should also act to retain the person in office and within the bank to beat the market demand of such personnel. ...