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Rethinking Bank Executive Compensation and Reward Strategy
30 March 2009, Grange City Hotel, London
PROGRAMME
| 0830 |
Coffee and Registration |
| 0900 |
Chair’s Welcome and Introduction |
| ASSESSING THE FUTURE STRUCTURAL FRAMEWORK AND REGULATORY CONTEXT FOR THE FINANCIAL SERVICES INDUSTRY AND WHAT THIS WILL MEAN FOR EXECUTIVE COMPENSATION AND REWARD STRATEGY |
| 0905 |
Reflection On The Financial Crisis: What Has Happened To Global Banks And The Economy And What This Means For Compensation And Reward |
- Future scenarios for the economic system - what is going to happen market-to-market and to market discipline?
- Are we are moving back to a more traditional financial structure and how might banks’ commercial products change in the coming years?
Followed by a pan-audience discussion looking at how the post-financial crisis shake-out will determine the future business strategies and future business models of banks, and what these changes will mean for remuneration strategy.
Prof. Peter Hahn
Faculty of Finance
CASS BUSINESS SCHOOL, CITY UNIVERSITY, LONDON
| 1000 |
GOVERNMENT AND REGULATOR PANEL – Interpreting The New Regulatory Guidance On Incentives and Remuneration Practices |
In October 2008, the FSA wrote to the CEO’s of a number of UK financial institutions to outline its initial views on good and bad remuneration practices. By March 2009, what further clarification will be available from the UK regulator about good remuneration practice, and what guidance or rules are other national regulators offering?
- Lessons to be drawn from the financial crisis - what changes in regulation and supervision might we see after recapitalisation?
- What are the new rules around compensation going to be?
- What will be defined as good and bad practice? What does ‘good’ actually look like?
- What might government and/or regulators need to do in terms of remuneration controls and how do they see the future for incentives and rewards within financial services?
David Raikes
Manager, Banking Sector
FINANCIAL SERVICES AUTHORITY
| 1045 |
Coffee And Networking in The Main Breakout Area |
| 1115 |
BANK PANEL - Defining What Is Best Practice For Remuneration Strategy Within Banking And Financial Services |
This panel will provide views from senior HR, reward strategy and compensation/ benefits executives – how are they reviewing strategy to ensure they support the bank’s future goals and what do they see as the future direction for both executive compensation and employee reward systems?
Bernard-Franck Guidoni Tarissi, Head of Executive and Senior Management Compensation, Fortis
Alexander Zerkowitz, HR Director, Raiffeisen Landesbank Steiermark
Neil Hayward, Head of People Strategy and Product Management, Standard Chartered
Bruno Carlier, Head of Compensation and Benefits, BNP Paribas
Charles Cotton, Reward Specialist, CIPD
| BREAK-OUT SESSIONS – DEVELOPING NEW SOLUTIONS TO THE CHALLENGES OF REMUNERATION AND REWARD IN THE FINANCIAL SERVICES SECTOR |
Break-Out Sessions
In recognition of the fact that there is no ‘one-size fits all solution’ to the issues facing the financial services sector, and in order to provide a forum for thought- leadership from within the industry on the key issues relating to executive compensation and reward strategy, the format for the afternoon will consist of facilitated roundtable discussions with each group offering feedback to the rest of the group at the end of the day. Panellists from the morning session will also join the roundtable sessions. Participants should select one of the following groups when registering:
A Retail Banking
B Wholesale Banking
C Fund Management
D Human Resources (all banking sectors)
|
| 1315-1500 |
BREAKOUT SESSION 1 - How Do We Incentivize People In The Right Way, And In A Risk-Adjusted Way? |
This break-out session will enable participants to get around the table with their counterparts in the industry to analyse the different approaches taken by different banks and discuss what good practice could actually be. How are Heads of Reward responding to the changed environment, what are the different approaches that are being used and with what success? For UK banks, since the FSA wrote to financial institutions in October 2008 to outline its initial views on good and bad remuneration practices, most banks have already begun the process of reviewing compensation strategies. By March 2009, with many banks at the end of their reviews, how have things worked and what else needs to be done? What lessons are there from this process for non-UK banks who do not come under the FSA’s jurisdiction and what international best practices can be shared?
Lessons To Be Drawn From The Financial Crisis And Bail-Out Legislation
- Governance models before and after
- What has this meant for industry and how can we design a variable remuneration system in response?
- Review of the reviews
- How will banks handle remuneration and long-term incentive plans?
- What are the solutions and how are people approaching it?
- Changing shareholder expectations
- Remuneration structures and how they impact risk management practices
- Factoring in the compliance culture
Adjusting To The Changes
- How do banks differing cultural values and value propositions impact compensation design?
- Building reward teams, developing different weightings
- What are the possible impacts of changes to reward systems on the organization, people, behaviours?
- Renewing compensation strategies in order to retain and attract top talent
- What do we see as the possible problems/scenarios?
- What do we see as the good and bad impacts?
Criteria for Success
- What guidance is being given to reward teams and HR teams to help influence their strategies?
- What are the quality measures that need to be brought in to help generate success?
- Who do you need to engage with?
- Who are the leaders in this area?
What Else Do We Need To Be Doing to Manage Risk In the Reward System?
There is no ‘one-size fits all’ solution for the banking industry that can be applied across the board. There are in built risks in any reward system, the important factor is how these are identified and managed. Looking further ahead beyond reward itself, what are the tangible people management practices that also need to be put into place to ensure the right culture is also being built.
- Management and governance of the remuneration process: who will review and manage the reward-risk issue and what should the process be?
- Top-down people management and HR practice, what needs to change here to support the new reward culture?
- What cultural changes might be necessary to encourage the right sort of behaviours?
- Balancing the emphasis on avoiding risk with motivating and retaining talent – how do we do this as individual banks and as an industry?
- Tacking public criticism to remuneration in banking, does this need to be addressed and if so, how?
- How can we develop employee engagement and a culture of performance?
| 1530-1700 |
BREAKOUT SESSION 2 - LATEST SOLUTIONS FOR COMPENSATION PLAN DESIGN AND HOW TO DETERMINE THE MOST APPROPRIATE LONG-TERM INCENTIVE PLAN |
- What is the latest thinking on compensation plan design? (levels, structures, incentive design)
- What alternative plans have been identified by different banks and how are these working in practice?
- Building a business case for your executive compensation program
- How will your plan align the interests of executives with shareholders and lead to increased shareholder value?
- Use of stock options, adjustments to accounting rules and impact on executive compensation packages
- Use of deferred bonuses - how long it would be reasonable to defer payment of the bonus and how much of it can be deferred?
- What will go into a longer-term incentive plan, and how can we predict what effects these will have? What financial and non-financial measures should be selected?
- Legal issues relating to design of compensation systems, including clawback and non-competition clauses
How To Define Measurable Performance Metrics For Incentive Schemes
- Selecting the right financial and non-financial measures of performance for executive compensation
- Maximizing the performance orientation of the executive compensation program plan
- Balancing the weighting of the measures
- How much of executives´ total compensation should be contingent upon achieving key performance goals?
- How do you change your system to adopt a performance-measured system based on other metrics apart from profits?
Bonus Culture – How Can We Redefine Bonus Culture in the Banking Sector?
- Bonuses previously paid out on profit figures not covering any risk components, what is the new way forward going to be?
- What is the philosophy of the bank, eg volatile for more of a betting culture, now how will things work?
- How does banking compare with other industries and what can be learned from other industries?
- Communicating on pay and bonuses and who/ how should we placate the critics? (or do we need to?)
| 1700 |
Break for Facilitators of Roundtables to Prepare Session Summaries and Conclusions for Presentation To The Whole Group |
| 1730 |
Summary Presentations and Conclusions From The Roundtables |
| 1800 |
Evening Drinks Reception for All Participants |
 Top
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| London Business Conferences are hosting a special, one-day, roundtable-style Summit on Reward Strategy and Executive Compensation . . More |
David Raikes, Manager, Banking Sector , Financial Services Authority
Neil Hayward, Head of People Strategy and
Product Management, Standard Chartered
Alexander Zerkowitz, Human Resource Director, Raiffeisen LB STMK
Bernard-Franck Guidoni-Tarissi, Director, Executive & Senior Management Compensation, Fortis
Bruno Carlier, Head of Compensation & Benefits, BNP Paribas
Peter Hahn, Ph.D,
Academic Fellow, Faculty of Finance, Cass Business School
Charles Cotton, Reward Specialist, CIPD
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