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Planning to Win

How strong is the correlation between wages and success since the fallout of the 2008 financial crisis? Edward Russell-Walling finds out whether the remuneration process has changed in financial services.

If Leicester City striker Jamie Vardy were a banker, and matched his achievements on the football field, there would be few complaints about the size of his pay packet. Few would question his commitment or accuse him of beingmotivated solely by money. There’s no doubt that what infuriates people most about high pay is rewards for failure, or for mediocre performance. While footballers and celebrities generally fall from grace when they fail to deliver, there is an impression that no one has the power, or will, to hold senior managers at financial services firms to account via their pay packets.

Shareholders should be in a position of influence as owners of banks, insurers and asset managers. When they flex their muscles, they can make an impact. HSBC cut the maximum amount its directors can earn by 7% after shareholder groups described its 2015 executive pay awards as excessive. Shareholder discontent in the US recently prompted Citigroup to introduce its own bonus caps, of a kind. Its performance-based share bonuses for executives are based on total shareholder returns relative to peers.