Two-thirds of companies boost salaries for risk, audit jobs

EUROPE - People in risk management jobs can expect to see bigger salaries as the financial services sector responds to greater regulation, according to a recent survey by Mercer.

The consultancy said its research also found that the financial sector was making progress in reducing the role of short-term incentives (STI).

This reduction has gone hand in hand with increases in base pay and a much greater use of deferred compensation and long-term incentives (LTI), Mercer said.
 
Vicki Elliott, partner, said: "Executive compensation and remuneration committees have endured another year of strong focus and scrutiny by its stakeholders.

"Our data shows corporate governance processes have been strengthened and pay structures have evolved since 2008.

"The widespread salary freezes and salary cuts for executives have come to an end, and most organisations have gone back to regular salary reviews."
 
Mercer said decreasing annual variable compensation levels had been balanced with the introduction of deferrals, "turning the bonus system into a more effective means of aligning bonus payouts with the time horizon of risks".

The report also pointed to widespread reviews of, and reductions in, "generous severance pay packages" due to public outcry.

And the trend for pension plans shifting from defined benefit to defined contribution schemes "continues unabated".
 
This year, the vast majority of organisations will increase salaries, with an average rise of 2.5% as part of their normal annual salary review, Mercer predicted.

The consultancy pointed out that, over the past two years, almost all financial services organisations have made changes to their compensation programmes and performance measures.

It said more organisations would adopt mandatory deferral plans and increasingly tailor those plans to new regulatory requirements. 

It added: "A third of the organisations surveyed plan to adjust or introduce clawback arrangements with malus bonus in 2011.

"While 30%  of organisations forecast higher 2011 bonus pools compared with the previous year, 60% expect no change.

"Typically, a bonus pool is determined by corporate or divisional performance or a combination of both."

Mercer's Pan-European Financial Services Executive Remuneration survey provides base pay and bonus data for senior executive level positions from 38 leading insurance, banking and financial services organisations across western Europe.