Bank USA: The Challenge of Compensation After the 2008 Financial Crisis

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Case

Reference no. 309-165-1

Subject category: Strategy and General Management

Authors: Claudia Zeisberger (INSEAD); Na Boon Chong (Aon); Grace Wu (Aon)

Published by: INSEAD

Originally published in: 2009

Version: 05.2013

Length: 16 pages

Data source: Published sources

Topics: Risk management; Bonus and incentive payments; Best practices in compensation packages; Financial crisis 2008 / 2009; Incentivising employees; Aligning shareholder value with company interests; Regulatory involvement in banks; Incentivising risk managers

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Abstract

The case is set in the financial services industry during the financial crisis of 2008 / 2009 and discusses issues when deciding on 'fair' compensation packages for both senior management as well as risk managers. How can banks justify multimillion dollar bonuses to top management, when the institution is showing a loss or accepting government money to survive? Can compensation packages be competitive and please both employees and shareholders at different stages of the cycle? The case highlights the industry's soul-searching and attempts to appease an outraged public and manage possible future stress situations better.

Location:

Global

Industry:

Banking and financial services

Other setting(s):

2008-2009