Banks’ compensation policies under the global pandemic: Evidence from the European banking sector

In times of the COVID-19 pandemic, banks are in the spotlight. On the one hand, they suffer from the inevitable negative repercussions on their performances (McKinsey, 2020); on the other hand, they are called upon to support the entire economy with timely interventions (EBA, 2020a). Within this scenario, the attention to the remuneration of top managers grows even more than in the past. Banks are expected to review their top management compensations, to make them financially and ethically compatible with the general situation (Camuffo, 2009). This study aims to investigate whether the COVID-19 pandemic incentivized changes in policies adopted by banks. In detail, we verify whether European significant banks, induced by the pandemic crisis, 1) introduced changes to remuneration policies and/or 2) adopted other measures – different from the remuneration ones. To that end, we analysed all official bank press releases published on websites during the first wave of the pandemic, using content analysis methodology. The results of our analysis show a wide spread of interventions carried out by banks to face global pandemic not so much concerning remuneration policies, but rather related to other areas, such as supporting the real economy, through donations to hospitals, volunteering associations or businesses in difficulty. Our paper contributes to the existing literature by providing a truly an up-to-date overview of bank reactions in times of crisis.