Global banks claw back staff bonuses

Almost one-fifth (17%) of banks clawed back compensation payments to staff in 2011, according to research by consultancy Mercer.

The Financial services executive compensation snapshot survey found that, prior to 2011, 44% of banks had a clawback provision in place and now a further 18% have introduced the measure.

The main reasons given for triggering a clawback included: the employee breaching a code of conduct (73%) and individual non-compliance, breach of authority or ethical violations (63%).

The survey also found that the majority (80%) of banks have introduced malus conditions on deferred compensation, which allows them to revise the payment amount or not pay out at all if the actual performance results turn out to be significantly less than the performance assessment when the original award was decided.

Vicki Elliot, global financial service human capital leader at Mercer, said: “Clawbacks are a new phenomena in compensation programmes, so it will take some time for them to bed down.

“A small number of clawbacks don’t signify that the sector is ignoring lessons from the financial crisis, but does raise legitimate questions about whether companies will actually seek pay-back of compensation paid.

“It will be interesting to see if, at a time when the news is dominated by major banking missteps and scandals in the US and UK, levels of clawback and malus increase in 2012.”