Naturally, the issue of Executive Pay has been a consistent focus for Financial Regulation Matters , with a number of posts discussing the elements that make up such a complex issue. News recently from the automotive/technology industries concerning Elon Musk has brought the issue to the fore once more, and in this post the focus will be on the record-setting pay-deal that was recently announced by Tesla, and then what may be the effects of this for the wider issue of executive pay across the financial sectors. Yesterday, the headlines where Musk was concerned were almost writing themselves, with The Guardian ’s ‘ Elon Musk wins approval for “staggering” pay deal with potential $55bn bonus ’ headline perhaps being representative of the response to the news from Tesla. However, the deal is a complex one with a number of conditions attached, which result in the reality of the situation being somewhat different. Essentially, Tesla has decided to grant its Billionaire founder a $2....

Although Australia has weathered the supposedly global storm after the Financial Crisis (a number of countries, of course, were simply not as affected by the Crisis like their Western colleagues), with consistently positive results being reported by their largest banks (until recently), and solid economic fundamentals in place to protect them from external shocks, the Australian Government is pressing ahead with plans to reform the banking system in the Country and, in today’s post, these reforms will be the focus. We discussed the situation in Australia only recently here in Financial Regulation Matters in relation to the Credit Rating Agencies taking aim at Australian banks, so it is clear that the Australian banking system is currently experiencing a very challenging time. In that sense, the proposed reforms, which are currently at the consultative stage, are the epitome of that changing environment, but the question for us today is whether the reforms can make a difference, ...

Here in Financial Regulation Matters and across the U.K., with regards to those concerned with Corporate Governance, the collapse of the large retailer British Home Stores (BHS) has been a cause of great debate, and even greater consternation. The ease with which the company fell, and the sheer arrogance of those who caused it, led to Parliamentary investigations and a number of increasingly damning investigations from Journalists, academics, and commentators. In February, in one of the first posts here in Financial Regulation Matters , we looked at the calls to make private companies abide by the Financial Reporting Council’s Corporate Governance Code (which is aimed at Public Companies only), whilst later we also looked at the calls to enforce the implementation of workers and stakeholders’ interests at Board level, together with the proposed binding-quality of shareholder votes when it came to Executive compensation. If we take a look back into the archives of posts, a growing...

Today’s post looks at a subject that has been the focus for many of the posts in Financial Regulation Matters and that is Executive Pay. In recognition of the ever-increasing issue of executive pay despite poor performance, the blog has analysed a number of issues in this field, ranging from BP recently cutting the pay packet of its CEO to Credit Suisse vowing to increase the bonuses it pays to its leading managers . However, as discussed in a post dating back to the 9 th of February, there is an undercurrent of unrest amongst shareholders that is slowly but surely beginning to shape the atmosphere amongst big business. In this post, the focus will be on reviewing the latest tranche of stories coming from the world of big business in relation to executive pay and, ultimately, the post will discuss how the trajectory of this movement to affect the pay packages of some of the leading business figures may continue. The first firm that will be worth discussing is Bunzl , the mul...

In this post, the focus will be on a subject that has been covered previously in Financial Regulation Matters , and that is shareholder activism. It was announced yesterday that BP, the massive Oil and Gas Company, will be cutting its CEO Bob Dudley’s pay package by 40%, to $11.4 million, in response to a revolt by its shareholders . This news represents the realisation of the understanding that was discussed in a previous post that shareholders are becoming more active in determining the direction of their companies, by way of controlling the incentives of their managers. The focus of this post will be on this particular example of shareholder activism, and also the wider effects that this activism may bring. Last year, it was reported that BP would axe up to 7000 jobs after reporting a loss of £4.5 billion , which was the worst in its history. This news was accompanied by the strategy to divest up to $8 billion of its assets over the next two years (so, up until 2018), which ...

This very short post aims to take a brief look at the recent news that Credit Suisse, the large banking entity that has a substantial presence in a number of key markets, have recently increased the amount that it will pay in bonuses, increasing its bonus pool by 6% which is represented by a total figure of £2.5 billion . However, for a firm carrying the negative reputation that Credit Suisse is currently carrying, this seems to be an exorbitant increase at a time when its competitors, who are similarly experiencing incredible amounts of negative publicity, have cut their bonus pools significantly – Deutsche Bank cut its 2016 bonus pool by almost 80% . This move by Credit Suisse represents either one of two things; either it shows the need to retain talent by way of increasing the remunerative package being offered, or it shows the disregard to those affected by Credit Suisse’s poor practices. Once again, the notion of ‘perception’ proves to be central here. Credit Suisse, like ...

Today’s post provides for updates on posts from last month in Financial Regulation Matters , as recent news has suggested that there are particularly important developments looming. Firstly, the post will look at the developments being undertaken by Lloyds in response to the fraud undertaken by Lynden Scourfield, via Halifax Bank of Scotland (HBOS). Then, the post will provide updates on the new wave of warnings being aimed at executives in receipt of large pay packages. Lastly, the post will provide a passing comment on the recent, undeniably brash warnings given by the Chairman of Barclays to Theresa May. Lloyds’ Griggs Review On the 6 th February, the case of six financiers being jailed for almost fifty years was the target of a post in Financial Regulation Matters . The financiers, led by the head of the Corporate Division in HBOS Lynden Scourfield, conspired against the owners of small and medium sized enterprises (SME) – the scheme was to funnel the business into the...

According to statements being made by the leading British institutional investors recently, this year’s AGM season will be characterised by an increased amount of investor-activism when it comes to Executive pay. The Church of England, in leading the Church Investors Group , has vowed that exorbitant pay deals in companies that it is invested, will not be tolerated. Furthermore, leading institutional investors like BlackRock – the world’s biggest fund manager – and Standard Life have also warned companies that they are on alert for excessive pay packages. This level of increased scrutiny is in reaction to an era where excessive risk taking and irresponsible practice was being rewarded with some headline-grabbing pay packages, like that given to banking chiefs during and since the Financial Crisis. Additionally, it has been reported that the level of bonus payments in the U.K., more generally, are rising to their highest levels since the Crisis. However, institutional investor...