Abstract
We provide an extensive overview of the determinants of compensation schemes for non-executive employees in the German and Swiss financial services industry. We analyze how pay systems adjust in the aftermath of the financial crisis and find that the crisis had a deep impact on short-term bonus payments. Our results indicate that restrictions on bonus payments may lead to higher fixed salaries and, hence, to a lower performance sensitivity of compensation. We also show that fixed compensation packages are highly standardized between banks, whereas bonus payments are more strongly related to differences between individuals. In Germany, bonuses vary to a higher extent across companies, whereas in Swiss banks, the differences are almost negligible when adding firm controls.
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