What are the Consequences of Regulating Executive Compensation?

Given the potential similarities of CEO pay in the UK, EU, and US, and to the extent that the existing institutions and enforcement are similar across the countries currently in the process of proposing regulation of compensation, our findings from the UK as well as our comparative results using US and EU bank should be of international interest to the parties engaged in the compensation debate. In particular, while some of the regulatory changes might have had positive consequences there are also potential endogenous costs to regulating executive pay. As the European Banking Authority recently stated, mutual funds under the scope of the European Capital Requirements Directive will also be subject to the same executive compensation bonus cap and deferral requirements starting in 2017.