Fat cat backlash (moderating the levels of remuneration for senior managers in the financial sector in the wake of the recent global economic and financial crisis)

Article Type: Abstracts From: Strategic Direction, Volume 27, Issue 4

Carter M.Accountancy, December 2009, Vol. 144 No. 1396, Start page: 36, No. of pages: 2

Reviews the action being taken by various organizations in financial institutions and the financial services sector to moderate the levels of remuneration for senior managers in the wake of the recent global economic and financial crisis (“credit crunch”) and recession which is judged likely to continue for some time in the future. Reports the activities of such bodies as the Financial Services Authority (FSA), which produced its code of practice on remuneration policies in August 2009, and the adoption by the European Commission (EC) of two new recommendations, dealing with remuneration in this sector and remuneration of directors of listed companies. Explains that institutional investor bodies have stated their views very clearly on what they are expecting to see, or not see, in the way of changes for the 2009/2010 financial year. Reveals that pressure on remuneration committees has become intense with the spotlight turning on the composition and operation of the committees. Notes the way that, over the past 12 months, the salary increases for executives in general have not been much different from previous years but a significant change has taken place with regard to the stated policy for 2009/2010 where significant salary freezes have been seen for a significant proportion of chief executives, notably 43.5 percent, 49.2 percent and 47.3 percent for FTSE 100, FTSE 250, and FTSE 350 companies, respectively. Concludes with a list of suggested changes to the governance and design of executive pay.Article type: ViewpointISSN: 0001-4664Reference: 39BB333

Keywords: Economic depression, Financial institutions,Recession, Remuneration, Senior management, United Kingdom