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Question 4 Which factors explain the growth in executive compensation in banking?

Question 4
Which factors explain the growth in executive compensation in banking?

Solutions

Expert Solution

Executive compensation in banking refers to financial compensation and other non financial compensation award, which are received by the employees of the bank when they are motivated to perform better and they perform better.

Factors which lead to growth in executive compensation in banking could be attributed to -

1 growth of the share market and liquidity of the share which are listed on the stock exchanges of the same bank, so it help them to provide the employees with stock options.

2. It also allows the bank to provide them with restricted stocks.

3.Bank can also use this as a payment method when they are facing the liquidity crunch and they want to take out their salaries in-form of stock so so they refrain from paying any kind of cash disbursement.

4. This type of compensation are also paid in order to follow with various kinds of litigation needs and in order to advantage from them.

5 .this can also be attributed to the desire of the professional to get paid in order to get motivated in-form of incentives which could be non-monetary as well.


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