The variable portion of the compensation of risk takers must be reduced in line with banks’ earnings. Specifically, loss-making banks must not pay bonuses. Bonuses must reward the achievement of stable earnings, not simply the fruit of extraordinary operations.
Only the  6  BIS central bankers’ speeches  structural components of income can serve as the standard for the determination of bonuses and, in the arrangements that so provide, for their restitution. Executives’ severance packages too must be clearly and effectively bound to the results attained. They must reflect proper evaluation of the manager’s performance.