Bankers' pay: What countries are doing

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The financial crisis has left bankers' pay and bonuses under intense scrutiny. Here are the approaches so far taken in major financial centres.

United States

President Obama plans to impose a cap of $500,000 (£341,000) on the pay of top executives at companies which receive state aid. The limit will apply to companies which have not applied for a bail-out yet.

The rules will force greater transparency on the use of corporate jets, office renovations and holiday parties as well as golden parachutes offered to executives when they leave companies.

UK

Restraints have already been put on executive pay at both Royal Bank of Scotland, which has had to sell 70pc of itself to the Government to survive, and Lloyds Banking Group, which the Government has a 43pc stake in. There are no restrictions on pay for more junior bankers at either institution.

UK Financial Instruments, the body that manages the Government's holdings in the banks, said on Feb 5 that no decisions have been taken on bonuses.

The European Commission

The Commission will bring forward proposals to regulate executive pay and bonus structures as part of a "financial markets for the future" package to be tabled in March. Officials are currently analysing legislative measures or codes of conduct planned, or implemented, in 20 European Union countries.

Proposals are likely to focus on the remuneration of executives working in banks that have been at the heart of the financial crisis and the recipients of large government bail-outs. Measures will cap pay or recommend changes to incentive structures to limit "excessive risk-taking" and short term decision making.

Shareholders are also expected to be given more oversight of executive pay and there is pressure for shareholder votes on remuneration issues. Other measures could limit "golden parachute" severance pay or link payments to specific performance requirements.

Germany

German measures to limit executive salaries to 500,000 euros (£435,000) as part of its 500bn euros (£435 bn) emergency bank bailout have widespread support across Europe. But debate still continues over whether limits and caps are introduced via codes of conduct or mandatory legislation.

Angela Merkel, the German Chancellor, stepped back from compulsory measures last year, stating instead that salaries over the 500,000 euros cap were "inappropriate".

France

Taking a different approach, Nicolas Sarkozy, the French President, has focused on the question of incentives and bonuses, rather than salaries.

France has decided, a view that is also dominant in Brussels, that changes to incentive practices are needed to prevent excessive risk taking being rewarded with bonuses.

Telegraph.co.uk
 
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