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The development of CEO’s annual bonus plans: A case study of the five largest UK banks
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
2015 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

On January 1st 2014, the European Union limited the amount of banker bonuses to not exceed the annual base salary, and thus a new directive called the 1:1 ratio was implemented under the Fourth Capital Requirement Directive (CRD IV).

Purpose – This study investigates the development of CEO annual bonus plans in the five largest UK banks during 2008-2013 in order to gain further understanding for the new regulation. Furthermore, the study investigates the impact of the regulation in 2014 CEO’s annual bonus plans.

Research design – The study is a quantitative research with a deductive approach. As the data collection mainly derives from the banks’ annual reports, journals and regulatory standard setters, it consists of secondary data. The case study comprises of a longitudinal research design.

Findings – The findings in this study show that there have been few changes in the annual bonus plans from 2008-2013 and that a substantial change was shown as a result from the 1:1 regulation in 2014.  Major regulatory impact has been found on all of the five banks.  In Barclays and HSBC the changes were most apparent.

Contribution – This study contributes to the field of research within CEO annual bonuses and more precisely the impact of CRD IV and the 1:1 regulation. This study may also act as a basis to build further research upon.

Value- Research within the field of remuneration and annual bonuses have been the focus on several studies as well as the impact of regulation on pay policies have been studied before. However, few studies have been conducted on the impact of the new 1:1 ratio under CRD IV. Based on research conducted, this study is considered to be the first to investigate the impact of the 1:1 ratio on the five largest UK banks and their CEO’s annual bonus plans.

Place, publisher, year, edition, pages
2015. , 51 p.
Keyword [en]
Annual bonus, Risk incentives, European Union, UK Banks, CRD IV, 1:1 regulation, Chief Executive Officer, Agency theoryAnnual bonus, Risk incentives, European Union, UK Banks, CRD IV, 1:1 regulation, Chief Executive Officer, Agency theory
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-27174ISRN: JU-IHH-FÖA-2-20150060OAI: oai:DiVA.org:hj-27174DiVA: diva2:820976
Subject / course
IHH, Business Administration
Supervisors
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Available from: 2015-07-30 Created: 2015-06-13 Last updated: 2015-07-30Bibliographically approved

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Citation style
  • apa
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