How Are Bankers Paid?

Benjamin Bennett; Radhakrishnan Gopalan; Anjan V. Thakor

doi:10.1093/rcfs/cfab003

The Review of Corporate Finance Studies Vol. 10 No. 4 2021

How Are Bankers Paid?

Benjamin Bennett¹; Radhakrishnan Gopalan²; Anjan V. Thakor³

¹ A. B. Freeman School of Business, Tulane Univers ity · ² Olin Business School, Washington University in St. Lou is · ³ Olin Business School, Washington University in St. Louis

Abstract

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. (JEL, F34, G32, G33, G38, K42)

DOI: 10.1093/rcfs/cfab003
Volume: 10
Issue: 4
Pages: 788-812
Language: en
Sources: openalex bibtex:phds-export.bib crossref

How Are Bankers Paid?

Abstract

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