Aligning the Compensation with long Tem Performance ….
In the past, the role of the bank’s CEOs was only discussed in the areas of economic and corporate governance, but now this has been shifted towards the business ethics. Some of the scholars, such as Cheng et al (2010), argued that fragile compensation and incentive schemes are the one of the ...
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...tant as all the incentives must be linked with the long term performance of the shareholders. The incentives must be rewarded on the basis of developing the shareholder’s wealth in the long term. Finally, in the long run, the main emphasis should be given to the business ethics as banks are unlikely to generate any extra ordinary gains, if their CEOs are not taking the serious risk in their investments. Therefore, it is pointless to focus on only one point that excessive risks taken by banks resulted to financial crises. The concentration must be diverted more towards the redesigning the ethical framework while taking a decision on CEOs incentive structure.
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