Tuesday, January 08, 2008
[IWS] Mercer: SURVEY--EXECUTIVE PAY in EUROPEAN FINANCIAL SERVICES COMPANIES [7 January 2008]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Mercer
Survey on Executive pay in European financial services companies [7 January 2008]
http://www.mercer.com/pressrelease/details.jhtml/dynamic/idContent/1291805
UK
London, 7 January 2008
* Banking chief executive officers received median bonus payments of 164 percent of base salary in 2007 (up from 121 percent in 2006), while insurance chief executives received 140 percent of base salary (up from 101 percent in 2006)
* Over 70 percent of compensation for financial services chief executives is paid through bonuses and long-term incentives
* Continued shift in Europe from options to restricted stock and performance-related shares; the majority of share plans have performance conditions attached. Share plans may prove popular given current share price turmoil
* Demand for top executives fuelled higher salary increases in 2007 (median salary increase of 6 percent for CEOs)
* Financial services companies are taking a more global and/or pan-European approach to executive remuneration decision-making for senior executive
Following another strong year in 2006/2007, banking chief executive officers received median base salaries of 1.15 million according to Mercer's Pan-European Financial Services Executive Compensation Guide < http://www.imercer.com/default.aspx?page=surveydetail&surveyid=3814&newRegionId=3 >. The survey also showed that bonus payouts of 164 percent of base salary were made in 2007, taking their median annual total cash compensation* to 2.7 million and the total direct compensation including long-term incentives to 4.3 million.
The survey provides total direct compensation information for all key board positions in the banking and insurance industries, with an overview of compensation policies and benefits for each location. The survey covers bonus payouts and long term incentive grants made in 2007 for the 2006 performance year and pay for the next three executive tiers, which is not disclosed in company reports.
According to the survey, insurance company chief executives received median salaries of 0.9 million with bonus payouts of 140 percent of base salary, bringing their median total cash compensation to 2.6 million and the total direct compensation including long-term incentives to 4.0 million. In the upper quartile, banking chief executive officers earn total direct compensation of 8.4 million compared to their insurance counterparts who earn 4.4m. The median chief executive officer salary increase was 6 percent.
According to Vicki Elliott, worldwide partner and Mercer's global financial services industry leader, "As part of a broader trend across Europe, remuneration for financial services executives has become more linked to performance. This has been driven by increased shareholder scrutiny. Financial services chief executive officers on average receive 70 percent of remuneration through variable performance related pay - in the form of annual bonus and long term incentives."
Ms Elliot continued, "The shift from options to restricted stock and performance-related share plans has continued. The majority of share plans in financial services companies now have performance conditions attached. The recent turmoil in financial services share prices means that share plans will have more value to executives than stock options. Many financial services companies use more than one long term incentive plan in order to balance achievement of financial performance goals with stock market volatility."
Among survey participants, 34 percent are planning to review long-term incentives and share-based schemes over the next 12 months.
Base pay
Median salary increases for financial sector executives across Europe ranged from 3.5 percent to 7.8 percent of base pay in 2007 and are expected to be between 2.8 percent to 5.0 percent for 2008, the survey found. However, demand for certain executive positions fuelled higher pay raises.
Pan-European approach
Mark Hoble, a partner in Mercer's UK executive compensation team added, "There has been a more pan-European approach to executive pay decisions. This has been driven by mergers and acquisitions activity, the expansion of financial services operations across Europe and the hunt for key executive talent. Increasingly, companies tend to benchmark themselves against other financial services organisations across Europe,"
Notes for Editors:
*Annual total cash refers to the total of annual base salary plus any guaranteed cash and the actual annual short-term incentive amount.
*Annual total direct refers to the total of annual base salary plus any guaranteed cash and the actual annual short-term and long-term incentive values.
The effective date of the pay and benefits data analysed in this study is 1 June 2007. The exchange rate used is EUR/GBP: 1.47083.
The survey covered 53 job positions and some 1,250 executives at 35 top multinational banking and insurance companies. This survey is only available to participants.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Mercer
Survey on Executive pay in European financial services companies [7 January 2008]
http://www.mercer.com/pressrelease/details.jhtml/dynamic/idContent/1291805
UK
London, 7 January 2008
* Banking chief executive officers received median bonus payments of 164 percent of base salary in 2007 (up from 121 percent in 2006), while insurance chief executives received 140 percent of base salary (up from 101 percent in 2006)
* Over 70 percent of compensation for financial services chief executives is paid through bonuses and long-term incentives
* Continued shift in Europe from options to restricted stock and performance-related shares; the majority of share plans have performance conditions attached. Share plans may prove popular given current share price turmoil
* Demand for top executives fuelled higher salary increases in 2007 (median salary increase of 6 percent for CEOs)
* Financial services companies are taking a more global and/or pan-European approach to executive remuneration decision-making for senior executive
Following another strong year in 2006/2007, banking chief executive officers received median base salaries of 1.15 million according to Mercer's Pan-European Financial Services Executive Compensation Guide < http://www.imercer.com/default.aspx?page=surveydetail&surveyid=3814&newRegionId=3 >. The survey also showed that bonus payouts of 164 percent of base salary were made in 2007, taking their median annual total cash compensation* to 2.7 million and the total direct compensation including long-term incentives to 4.3 million.
The survey provides total direct compensation information for all key board positions in the banking and insurance industries, with an overview of compensation policies and benefits for each location. The survey covers bonus payouts and long term incentive grants made in 2007 for the 2006 performance year and pay for the next three executive tiers, which is not disclosed in company reports.
According to the survey, insurance company chief executives received median salaries of 0.9 million with bonus payouts of 140 percent of base salary, bringing their median total cash compensation to 2.6 million and the total direct compensation including long-term incentives to 4.0 million. In the upper quartile, banking chief executive officers earn total direct compensation of 8.4 million compared to their insurance counterparts who earn 4.4m. The median chief executive officer salary increase was 6 percent.
According to Vicki Elliott, worldwide partner and Mercer's global financial services industry leader, "As part of a broader trend across Europe, remuneration for financial services executives has become more linked to performance. This has been driven by increased shareholder scrutiny. Financial services chief executive officers on average receive 70 percent of remuneration through variable performance related pay - in the form of annual bonus and long term incentives."
Ms Elliot continued, "The shift from options to restricted stock and performance-related share plans has continued. The majority of share plans in financial services companies now have performance conditions attached. The recent turmoil in financial services share prices means that share plans will have more value to executives than stock options. Many financial services companies use more than one long term incentive plan in order to balance achievement of financial performance goals with stock market volatility."
Among survey participants, 34 percent are planning to review long-term incentives and share-based schemes over the next 12 months.
Base pay
Median salary increases for financial sector executives across Europe ranged from 3.5 percent to 7.8 percent of base pay in 2007 and are expected to be between 2.8 percent to 5.0 percent for 2008, the survey found. However, demand for certain executive positions fuelled higher pay raises.
Pan-European approach
Mark Hoble, a partner in Mercer's UK executive compensation team added, "There has been a more pan-European approach to executive pay decisions. This has been driven by mergers and acquisitions activity, the expansion of financial services operations across Europe and the hunt for key executive talent. Increasingly, companies tend to benchmark themselves against other financial services organisations across Europe,"
Notes for Editors:
*Annual total cash refers to the total of annual base salary plus any guaranteed cash and the actual annual short-term incentive amount.
*Annual total direct refers to the total of annual base salary plus any guaranteed cash and the actual annual short-term and long-term incentive values.
The effective date of the pay and benefits data analysed in this study is 1 June 2007. The exchange rate used is EUR/GBP: 1.47083.
The survey covered 53 job positions and some 1,250 executives at 35 top multinational banking and insurance companies. This survey is only available to participants.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 5:51 AM
