It is generally conceded that inappropriate incentives and
remuneration structures led to unwelcome behavior in the banking
industry: this increased risk and contributed to the crisis.
Regulators across Europe and Asia-Pacific are now focusing closely
on this topic in relation to investment management firms,
reflecting the political imperative to control excess and reduce
risk. Firms will have to respond. But it will be important to
preserve flexibility.
General anger, specific concern
Remuneration is one of the more politically sensitive issues to
emerge as a priority from the financial crisis. When times are
good, there appears to be little general concern over levels of
remuneration in the financial sector. But when things go wrong,
causing loss and damage to millions of people, there is an
inevitable focus on the contrast between performance and reward.
The sense that senior executives, in particular, have 'got away
with it', and in many cases received massive
