Clawbacks – a relatively new phenomenon that allows employers to reclaim paid-out compensation based on financial restatement, gross negligence or other malfeasance – are increasingly common in compensation structures for banks today. Clawbacks have been encouraged by regulators in Europe and North America as a way to manage employee risk-taking following the financial crisis of 2008. Mercer’s Financial Services Executive Compensation Snapshot Survey examines these and other compensation trends in 63 global financial services companies.
“There are a variety of reasons why actual clawbacks of payments already made are limited,” says Vicki Elliott, Global Financial Services Human Capital Leader at Mercer. “Often the concept conflicts with local labor laws, so actually recouping the funds can be difficult.”
Also, she adds, “Clawbacks are relatively new phenomena in compensation programs so it will take some time for them to gain acceptance. 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.”
See how financial services firms are reclaiming pay.
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For more information about this survey, visit www.mercer.com/press-releases/17-percent-of-banks-clawed-back-compensation-in-2011.