How Our Conception of Pay Has Changed

The enormity of the recent economic crisis has forced many companies to reassess their objectives and business strategies, including their employee and executive pay systems. Salary levels, as a whole, have remained flat, so as to help reduce costs. The most significant changes have been to variable pay models. New approaches, such as pay deferral, clawback or vesting, are increasingly common, often as a result of new regulations and better governance codes. The authors take a comprehensive look at current trends in fixed and variable pay. Based on their study of the financial and insurance sectors in Spain, they recommend several ways in which companies can improve employee and executive compensation policies.