Executives' Compensation of European Banks - Disclosure, Sensitivity, and Their Impact on Bank Performance

Munich Business Research Paper No. 2000-01

37 Pages Posted: 17 Aug 2000

See all articles by Hans-Peter Burghof

Hans-Peter Burghof

University of Hohenheim

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Date Written: June 2000

Abstract

The focus of the paper is on the remuneration of executives of large European banks. We describe the pay-for-performance sensitivity of the compensation and its disclosure as two dimensions of the board remuneration systems in the European countries. The results stress the importance of transparency for performance, whereas the results for the pay-for-performance- sensitivity are distorted by the fact that the total value of compensation and sensitivity cannot be deducted from annual reports. This is mainly due to the use of stock option programs and limited disclosure practices. Thus, from our results a first step to a better performance of European banks and maybe a fruitful field for European harmonization would be to define stricter disclosure rules for executive compensation.

Key Words: Board compensation; European banking; Disclosure

JEL Classification: G21, G34, J33, M41, M45

Suggested Citation

Burghof, Hans-Peter and Hofmann, Christian, Executives' Compensation of European Banks - Disclosure, Sensitivity, and Their Impact on Bank Performance (June 2000). Munich Business Research Paper No. 2000-01, Available at SSRN: https://ssrn.com/abstract=237250 or http://dx.doi.org/10.2139/ssrn.237250

Hans-Peter Burghof (Contact Author)

University of Hohenheim ( email )

Schloss Hohenheim
510F
Stuttgart, 70599
Germany
+49 711 459 22900 (Phone)
+49 711 459 23448 (Fax)

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

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