Abstract

Background: The increase of variable remuneration caused the financial crisis, leading to governments having to bail them out. A legislation was launched to prevent this situation again.

Purpose: The purpose of the report is to examine the effects of the legislation in the G-SIBs, which aim to limit the variable pay in relation to fixed pay.

Method: The study is a quantitative study. The sample consist of 14 banks and data was collected during the period 2012-2016. The data is secondary and was hand collected from the banks’ annual reports. The data is then compared throughout the years and with the banks within the sample.

Conclusion: The legislation has succeeded in limiting the variable pay, but the study also shows an unintended consequence, as the fixed remuneration also has increased. This suggests that banks have found a loophole in the legislation, hence the total remuneration levels can be maintained at the same level as before the launch of the legislation.