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Research shows four reasons why managers undervalue a key component of pay packages.
Compensation specialists suggest that most increases will be in cash, with the stock component of pay remaining stable.
While the regulators do not specify what the cap should be, their guidance is for an "explicit maximum ratio on the variable component in relation to the fixed component" of pay.
The explanatory power of the regression (i.e., the R-squared) increases from 23% to more than 50% once we account for the common component of pay to managers within the same fund family in a given year.
The Lord Mayor, who defends bonuses as a "very sensible component" of pay, has also invited Dame Clara Furse, the former chief executive of the London Stock Exchange and a key player at TheCityUK, set up to bolster the industry's battered image.
Exercised stock options account for the main component of pay, 30%.
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"Some see them as working for the team, unbiased in decision-making, but I think when you add that component of paying for the right to take care of the team, you further compromise that relationship.
Cash and stock awards, the main components of pay packages, fell last year.
Stock-based compensation continues to increase, while the aggregate of all other components of pay remains relatively unchanged.
Europe's top banking regulator has cast doubt on the use of such top-ups, concluding they should be counted as variable components of pay and hence risked breaching the new rules.
But the EBA contradicted this view and said that these extra payments should be regarded as "variable" components of pay, like a bonus, and that banks using them are breaching the ratio set out by the EU.
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