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Bonus malus/clawback provisions and non-financial performance metrics rise as banks and insurers respond to regulatory pressures

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Mercer’s latest Financial Services Executive Compensation Snapshot Survey shows that 78 per cent of companies are making changes to their executive pay programmes as a result of difficult market conditions. 

The most popular changes planned are the strengthening of bonus malus and clawback conditions (47 per cent), strengthening the link between performance management and compensation (44 per cent) and increasing the use of non-financial measures (31 per cent) in reviewing performance.

The survey reviewed the pay practices of 55 global financial services companies – banks, insurers and other financial services companies – based in 15 major countries in Europe, North America, and Asia. Mercer’s report is intended to provide an update on key global changes and practices in financial services compensation programmes. The report is designed to capture the latest changes or anticipated changes to compensation programmes among major financial services companies.

According to Vicki Elliott (pictueed), Senior Partner at Mercer: “Financial services HR teams and remuneration committees are being challenged to find ways to structure pay to engage, motivate and retain high-performing staff while being mindful of regulatory requirements and public pressure. Since 2008, we’ve seen a steady change in approach as companies actively tie rewards more closely to risk and multi-year performance.”

Mercer’s latest report highlights changes financial services companies are making to their approaches in 2015. For example, there is much focus on increasing individual differentiation in their bonus distributions.

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