ChallengeA firm headquartered in the Asia Pacific region approached McLagan seeking counsel regarding its incentive funding levels and practices for its capital markets and corporate banking lines of business. The bank wanted to ensure competitiveness while balancing pay with shareholder and regulatory pressures. 

Key Issues

• The bank was looking to grow further into international markets.
  
  
• The bank wanted to establish a best practice for incentive funding and delivery of pay .
  
  
• The firm needed validation of both competitive funding rates and pay levels among a group of local and global banks.

SolutionThe solution was a top-down funding analysis, validated by a bottom-up benchmarking exercise:

1. McLagan worked with the client to validate peer comparators based on our understanding of the competitive market. McLagan leveraged its proprietary financial database and reached out to additional firms to collect historical financial performance and compensation spend.
   
   
2. Given the different business models among peers, the information was normalized to align with the clients organizational structure. The result was an apples-to-apples comparison of funding/payout rates for the firm vs. peer comparators.

McLagan leveraged its proprietary compensation database to conduct a custom benchmark gap analysis. The result was an aggregate funding requirement to meet competitive target quartiles, based on individual benchmarks of ~3,000 employees in the division.

ResultsLooking at both a top-down funding and bottom-up requirement, the bank was able to validate current funding levels and adjust them based on firm goals and relative financial performance. The client received approval from the Board on funding levels to support the global growth initiative.