"Responsible" remuneration policies in banks : a review of best practices in Europe

The inclusion of non-financial metrics in remuneration plans can help companies achieve sustainable business goals. Moreover, investors, by assessing the remuneration policies of companies, could be better able to identify worthy firms in the long-term interests of shareholders and society, enabling them to make more responsible investments. This work investigates the use of non-financial performance measures in executive compensation. A sample of globally, systemically important European banks are analysed over the period 2013–2016. A quantitative score is developed using the content analysis approach. The results show an increasing use of these metrics by banks. However, the approaches adopted are still very diversified and not uniform. The main contributions of this study are (i) a systematic review of the adoption of non-financial metrics in bank remuneration contracts; (ii) a comparison of best practices in Europe; and (iii) useful indications for top management and investors to promote the use and knowledge of these non-financial criteria.