Abstract
This paper assesses whether compensation practices for bank Chief Executive Officers (CEOs) changed after the Financial Stability Board (FSB) issued post-crisis guidelines on sound compensation. CEO compensation has become more sensitive to risk, with CEOs in the post-reform period at riskier banks receiving less variable compensation than those at less-risky peers. This was particularly true of investment banks. The changes in compensation practices are in line with the FSB’s Principles and Standards of Sound Compensation, although we do not detect significant differences between banks in jurisdictions that directly implemented the FSB guidelines compared to the other banks.
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