Executive Compensation
Order Description
Executive Compensation
Please read the extract from the Remuneration Report of Barclays PLC for 2017.
“The Committee remains focused on aligning our pay to performance and setting pay at a level which allows us to attract, retain and motivate, but is no more than
necessary to ensure that we accelerate the delivery of shareholder value. The inherent tension between these important considerations continues to be a key component
of the Committee’s deliberations.
We will be seeking shareholder approval for a new Directors’ remuneration policy (DRP) at the 2017 AGM. The new policy adopts, where possible, a more simplified and
transparent approach to remuneration and is more closely aligned to Barclays’ remuneration philosophy. Changes in the policy also address recent regulatory
developments, in particular the requirement to defer bonuses and Long Term Incentive Plan (LTIP) awards for a period of up to seven years. We have also introduced a
new requirement for executive Directors to hold shares for two years post-termination.
The Committee will continue to focus on ensuring that remuneration is aligned to the delivery of our strategy and sustainable shareholder returns. The Committee will
also continue to monitor the competitiveness of our remuneration in the light of recent regulatory changes by the PRA, FCA and EBA. These changes have compounded the
competitive disadvantage for UK based global firms attributable to the lack of a global level regulatory ‘playing field’.”
Assume that Barclays wishes to hire your services as an executive compensation consultant. Due to the current (June 2017) Serious Fraud Office case involving the large
sums the bank raised from investors in Qatar to enable the bank to avoid a government bailout in 2008, Barclays is seeking to review its compensation policy and
incentives structure for 2018.
Your task is to write a report, which contains a rigorous analysis of relevant issues and a set of recommendations. Barclays is offering you a choice of assignment.
You may answer one of the questions below, two of the questions, or all four questions. The report must be 3,000 words in length irrespective of the number of
questions you answer. Your report may include appendices that do not contribute towards the word count.
Some CEOs are “superstars” and their remuneration reflects their talent. Debate whether the available evidence supports this statement or not.
2. Executive compensation contracts should provide efficient incentives for CEOs to maximise shareholder value. Critically evaluate claims in the managerial power
approach and optimal contracting theory that pay-for-performance relations are broken or not.
3. The notion of pay-for-performance continues to underpin arguments on how best to reform executive compensation arrangements. Trace the debate and explain how the
introduction of concepts, such as, malus and clawback, and a greater use of debt and deferred compensation might be a step in the right direction.
4. Would the outrage over CEO pay following financial crisis and corporate scandals be as severe if the CEOs were female i.e. would increasing the proportion of female
executives improve firm performance via its effect on risk-taking?
Assignment guidelines:
? Length should be a maximum of 3,000 words (- or + 10%) (excluding references).
? It must include correct and appropriate referencing, which will influence marks. Students are advised to follow the Harvard referencing style
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