20100913-奥纬咨询-Compensation_Reform_in_Wholesale_Banking_2010_Progress_on_Implementing_Global_Standards_59页_627kb

Progress in Implementing Global Standards - Summary

1. Background and Objectives
The report from the Institute of International Finance (IIF), in collaboration with Oliver Wyman, assesses the wholesale banking industry's progress in implementing the FSB's Implementation Standards for sound compensation practices, released in September 2009. These standards aim to address structural weaknesses in compensation systems contributing to systemic risk. The survey gathered input from leading wholesale banks to determine industry progress in governance, bonus calculation, and payout structures.

2. Industry Progress

• Significant advancements have been made in governance, risk adjustment, and deferred payouts.
• Most institutions have met key requirements of the FSB standards.
• Challenges remain in aligning deferral periods with risk time horizons and incorporating complex risk metrics into compensation formulas.

3. Key Areas of Improvement

• Compensation Governance: Enhanced board and committee oversight, greater involvement of risk functions, and increased disclosure.
• Bonus Calculation: More use of risk-adjusted metrics and balanced scorecards for performance assessment.
• Payout Structures: Increased deferral periods (over 85% of companies use at least 3 years) and higher proportions of deferred compensation (around 40-60% of variable pay).

4. Persistent Challenges

• Differences between national regulations create implementation barriers.
• Technical difficulties include complicated deferral mechanisms, claw-back systems, and assessing long-term performance tied to risk-exposure.
• Talent retention issues due to competitive pressures and deferral policies.

5. Recommendations

• Regulators should enhance consistency among jurisdictions.
• Companies need globally coordinated policies to ensure all steps toward Compensation Reform compatibility.
• Further industry and public sector collaboration is essential for full alignment.

Overall, while substantial improvements have been achieved, cumulative efforts are needed for comprehensive compensation system reform.