How are Bankers Paid?

How are Bankers Paid?

Benjamin Bennett, Radhakrishnan Gopalan, Anjan Thakor

Series number :

Serial Number: 
660/2020

Date posted :

February 18 2020

Last revised :

February 18 2021
SSRN Share

Keywords

  • executive compensation • 
  • Corporate governance • 
  • finance industry • 
  • TARP

We empirically examine bank CEOs’ compensation.

We find that bank CEOs (a) are paid less than their nonfinancial counterparts, an effect driven by the CEOs of small bank; (b) experienced declining compensation during 2007–2009 (the hardest-hit banks cut compensation more) but pay is now 24% higher than precrisis levels; (c) are paid more at larger banks, those with less nonperforming loans, those with a higher proportion of noninterest income, and those with less demand-deposit dependence; and (d) have pay highly sensitive to ROA and ROE, but not stock returns. Tail risk is higher when compensation depends more on short-term measures of performance.

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Published in

Published in: 
Publication Title: 
forthcoming, Review of Corporate Finance Studies

Authors

Real name:
Benjamin Bennett
Real name:
Radhakrishnan Gopalan
Professor
Real name:
Anjan Thakor
Research Member
John M. Olin School of Business, Washington University, St. Louis