Yu, P., Yang, H. J. and Kakabadse, N. K. (2011) Developing "best practices" for bankers' pay in line with Basel III. Risk Governance and Control: Financial Markets and Institutions.1(3), pp. 7-16. 2077-4303 (online version) 2077-429X (printed version).
This paper proposes hybrid capital securities as a significant part of senior bank executive incentive compensation in light of Basel III, a new global regulatory standard on bank capital adequacy and liquidity agreed by the members of the Basel Committee on Banking Supervision. The committee developed Basel III in a response to the deficiencies in financial regulation brought about by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The hybrid bank capital securities we propose for bank executives’ compensation are preferred shares and subordinated debt that the June 2004 Basel II regulatory framework recognised as other admissible forms of capital.