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CEOs' Remuneration Systems: A Study of the Five Largest Listed Banks in the UK
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]

Purpose – The purpose of this study is to analyse and compare how the CEOs’ remuneration systems have evolved within the five largest listed UK banks between 2008-2013. The banks are HSBC, Barclays, Royal Bank of Scotland, Lloyds Banking Group, and Standard Chartered. Of interest is also what impacts that can be derived in the CEO’s remuneration structures considering implemented laws and regulations.

Research Design – A deductive approach is used in this multiple-case study in order to answer the research questions. The study encompasses the time span 2008-2013 and therefore a longitudinal design is used for the data collection. The data of interest is presented in the banks’ consolidated annual reports, these documents are published on each of the banks’ websites, where we have retrieved them from. The data was then processed, the components of the remuneration system were divided into four categories; base salary, annual incentives, deferred incentives, and allowances. Further, a content analysis was carried out based on these categories and put in tables in order to interpret the data. 

Findings – The findings demonstrate that the Capital Requirement Directive IV has had and will have even more impact in the future. The banks have started to adapt their remuneration packages or state that they are planning to do so in order to comply with the stipulated regulations. The banks have however not decreased the size of the remuneration packages for their CEOs. In HSBC, Royal Bank of Scotland and Lloyds Banking Group the remuneration has rather been reallocated to other components that are classified as fixed pay (base salary, allowances) instead of variable pay (annual incentives) as a way to evade the intentions of the Capital Requirement Directive IV. Barclays and Standard Chartered state that they will use the component allowance with a start in 2014. During the period our findings reveals that the banks’ profits has decreased while the CEOs’ remuneration has increased, however all five banks state that the CEOs’ remuneration packages will decrease with a start in 2014.

Contribution – This study contributes with knowledge regarding the development of the CEOs’ remuneration systems in five UK banks between the years 2008-2013. It also provides insights about the Capital Requirement Directive IV and what impacts it has had, which enabled us to confirm that the banks find their ways in order to evade it. 

Place, publisher, year, edition, pages
2015. , 49 p.
Keyword [en]
remuneration system; remuneration package; bonus; allowance; banking sector; chief executive officer; CRD IV; United Kingdom; UK; corporate governance; managerial power theory
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-27424ISRN: JU-IHH-FÖA-2-20150198OAI: oai:DiVA.org:hj-27424DiVA: diva2:825583
Subject / course
IHH, Business Administration
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Available from: 2015-07-31 Created: 2015-06-23 Last updated: 2015-07-31Bibliographically approved

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Citation style
  • apa
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More styles
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