Regulation of Executive Compensation in Financial Services
Report from Greenberg Center for Geoeconomic Studies
Report from Greenberg Center for Geoeconomic Studies

Regulation of Executive Compensation in Financial Services

Report by Squam Lake Working Group on Financial Regulation

February 2010 , 6 Pages

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Report

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Corporate Governance

Economic Crises

United States

Overview

Many people argue that inappropriate compensation policies in financial companies contributed to the global financial crisis. Some say the overall level of pay was too high. Others criticize the structure of pay, claiming that contracts for CEOs, traders, and other professionals induced them to pursue excessively risky and short-term strategies. This Working Paper, the eighth in the Squam Lake Working Group series distributed by the Center for Geoeconomic Studies, argues that governments should generally not regulate the level of executive compensation at financial firms. Instead, a fraction of compensation should be held back for several years to reduce employees’ incentives to take excessive risk.

More on:

Corporate Governance

Economic Crises

United States

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