Abu Dhabi Commercial Bank is set to be the first local lender to disclose the pay packages of its top executives.
ADCB first to pay and tell
Abu Dhabi Commercial Bank (ADCB) looks set to become the first local lender to disclose the pay packages of top executives to try to increase transparency. Its plan to disclose management compensation from next year comes at a time when lenders across the globe have come under pressure to be more open about executive pay.
Some UAE banks already disclose how much board members are paid, but none releases figures on executive compensation. "Although the plans are at an early stage and subject to final approval, it is likely that next year ADCB will disclose details about remuneration paid to top executives," said Simon Copleston, the general counsel of ADCB. "That will be a first in the market." The bank also has preliminary plans to put its remuneration policies to a shareholder vote to involve the company's stakeholders in decisions on executive pay, Mr Copleston said.
Executive pay disclosures have long been required by regulators in developed countries. In the US, the Securities and Exchange Commission compels listed firms to tell shareholders in plain language how much their highest-paid executives and board members are paid, and provide a single compensation number in their annual reports encompassing all bonuses and benefits. Proposals for further clarity and possible limits on executive pay at financial firms are under consideration around the world. Many financial institutions have come under fire in recent months because of large salaries and bonuses paid to executives, despite poor performance and government rescue packages in the financial crisis.
A report this week stated three of Wall Street's largest firms - Goldman Sachs, Morgan Stanley and JPMorgan - plan to pay US$30 billion (Dh110.19bn) in bonuses to employees this year, or more than $250,000 for each employee. Regulators in the Gulf do not require banks to reveal what they pay But ADCB hopes its move will make it stand out favourably to investors. The bank also sees an advantage in letting its shareholders vote on decisions about how executives are rewarded for long-term performance.
"It would be an unprecedented step, and from that respect it is certainly setting a new bar for transparency in the region, which would be welcomed for sure," said Ali Khan, a director at Arqaam Capital in Dubai. "That transparency would be welcomed, but it's equally important to understand how they're being incentivised to deliver success." The planned disclosures are part of a move started in late 2007, when the bank brought in the International Finance Corporation, a private-sector wing of the World Bank, to advise on corporate governance.