from Greenberg Center for Geoeconomic Studies

Regulation of Executive Compensation in Financial Services

February 22, 2010

Report

More on:

Corporate Governance

Economic Crises

United States

Overview

Many people argue that inappropriate compensation policies in financial companies contributed to the global financial crisis. Some say the overall level of pay was too high. Others criticize the structure of pay, claiming that contracts for CEOs, traders, and other professionals induced them to pursue excessively risky and short-term strategies. This Working Paper, the eighth in the Squam Lake Working Group series distributed by the Center for Geoeconomic Studies, argues that governments should generally not regulate the level of executive compensation at financial firms. Instead, a fraction of compensation should be held back for several years to reduce employees’ incentives to take excessive risk.

More on:

Corporate Governance

Economic Crises

United States

Explore More on CFR

Japan

CFR's Sheila A. Smith joins James M. Lindsay to discuss the recent meeting between Japanese Prime Minister Shinzo Abe and President Trump. 

Syria

Syria is likely to remain a broken country for years to come. The latest strikes did not change that reality.

Cuba

Miguel Diaz-Canel, set to replace Raul Castro as president of Cuba after sixty years of Castro rule, will be faced with the challenges of implementing economic reform and sidestepping regional isolation.