Executive Compensation Related to Long-Term Performance in the Financial Sector
We believe that, in the same way that badly designed monetary incentives can encourage inappropriate risk taking and short-termism, so properly designed monetary incentives can help motivate people to adopt desired behaviours, not least by defining who is recruited and retained. Our group will explore how incentives can help overcome short-termism, and help move financial markets towards sustainability. We believe that the interface between asset owners and fund managers is a crucial starting point. The use of fee structures or incentive schemes that are designed for the long-term can lead to better alignment with pension funds’ or sovereign wealth funds’ long-term liabilities and in turn, may encourage these asset owners to review their own incentive frameworks.
Objective: We will define different incentive-based strategies that pension funds or sovereign wealth funds can employ to encourage the adoption of a long-term perspective by their agents (e.g. fund managers).
Co-Chairs: UK – Ebba Schmidt (ebbaschmidt@yahoo.co.uk), Raj Thamotheram (RThamotheram@yahoo.co.uk)
If our work is of interest to you, please contact us to explore what we are planning and whether/how you might want to contribute.
