Abstract

The FSB held in London on 14 April 2015 its third workshop on compensation practices to share experiences and lessons on the implementation of the FSB Principles and Standards for Sound Compensation Practices by banks. The workshop focused on governance of ex ante and ex post risk adjustment processes; aligning compensation and risk from the perspective of the risk management function; and compensation and conduct. The key takeaways from the workshop are that: effective governance of compensation starts with the right ‘tone at the top’, and with the risk management function playing a key role; continuing progress has been made by banks in aligning compensation with risk; boards are increasingly focusing on conduct issues. Official sector representatives from the FSB Compensation Monitoring Contact Group and senior executives from global systemically important banks participated in the workshop.