Book contents
- Market or State
- Market or State
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- Abbreviations
- 1 Introduction
- 2 The Pre-GFC Practice of Bankers’ Remuneration in the UK
- 3 The Regulation of Bankers’ Remuneration in the UK
- 4 The Post-GFC Practice of Bankers’ Remuneration in the UK
- 5 The Traditional Practice of Bankers’ Remuneration and Incentives in China
- 6 The Regulation of Bankers’ Remuneration in China
- 7 The Recent Practice of Bankers’ Remuneration and Incentives in China
- 8 Market or State: Differences in the Regulations and Practices of Bankers’ Remuneration in the UK and China
- 9 Conclusion
- Book part
- Bibliography
- Index
2 - The Pre-GFC Practice of Bankers’ Remuneration in the UK
Published online by Cambridge University Press: 15 September 2022
- Market or State
- Market or State
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- Abbreviations
- 1 Introduction
- 2 The Pre-GFC Practice of Bankers’ Remuneration in the UK
- 3 The Regulation of Bankers’ Remuneration in the UK
- 4 The Post-GFC Practice of Bankers’ Remuneration in the UK
- 5 The Traditional Practice of Bankers’ Remuneration and Incentives in China
- 6 The Regulation of Bankers’ Remuneration in China
- 7 The Recent Practice of Bankers’ Remuneration and Incentives in China
- 8 Market or State: Differences in the Regulations and Practices of Bankers’ Remuneration in the UK and China
- 9 Conclusion
- Book part
- Bibliography
- Index
Summary
This chapter investigates the pre-GFC practice of bankers’ remuneration in the UK to discover how bankers’ remuneration affected the sustainability of banks. It starts with an overview of executive remuneration in Anglo-American corporate governance, focusing on its role as both a solution to the agency problem and a mechanism for shareholder interest maximisation. This chapter then examines the practice of bankers’ remuneration in the ‘Big Four’ banks of the UK from 2000 to 2007. It is found that performance-based remuneration, which was aimed at aligning bankers’ wealth with shareholder interest, was the primary remuneration component. Stock options and restricted shares were widely used as performance-based remuneration, and financial indicators oriented by short-term profit and shareholder return were the primary metrics of bankers’ performance. As a result, bankers were incentivised to take excessive risks, which eventually contributed to the vulnerability of banks and their failures.
Keywords
- Type
- Chapter
- Information
- Market or StateThe Regulation and Practice of Bankers' Remuneration in the UK and China, pp. 10 - 38Publisher: Cambridge University PressPrint publication year: 2022