I'm quite skeptical about the link between reward and behaviour in terms of executive remuneration. This is for a number of reasons. First, it seems unlikely that someone who is already very well-paid (an exec director of a FTSE100 company I mean here) is incentivised in a material way by even more money. They don't need it.
Second, it is very obvious that there is little linkage between what they get paid and their own performance. Usually bonuses, options etc are tied to some pretty basic share-based metrics. Yet clearly one individual cannot be held responsible for the performance of an entire business, there's no way they have control all the various factors that contribute to it. And I'm even less convinced that share price tells us anything useful about how well the board is doing.
Finally, I think most executive directors are pretty sure of themselves. I suspect that they are more prone than the man on the Clapham omnibus to personalise success ('what a great decision I made') and externalise failure ('it's a difficult trading environment for everyone'). Therefore they might also downplay the reason for not getting a bonus, rather than linking it to their own poor performance. (incidentally this might also explain why the 'apologies' provided by bank execs to the select committee hearings seemed so feeble - because they still can't personalise the failure, to them it's still the result of forces beyond their control).
As a result of all this, I'm not sold on the idea that remuneration was a driver of behaviour in this crisis in the way that is commonly thought. I'm not denying that bankers were aware they were going to make out like bandits in the short term and were already planning how to spend the money, but I'm less convinced that these incentives drove what they did in a straightforward 'billiard ball' model of causation.
Instead I wonder if performance-based pay served as a reinforcement mechanism. Bankers developed the internal narrative that they were in control of events, that they were uniquely talented, that they knew what they were doing. Each time they received a hefty bonus this was further evidence to confirm their personal narrative, and encourage their belief in their own rightness. And arguably this may have actually made the situation more dangerous than simple greed would have done, as the bankers became increasingly hubristic about their abilities, leading to excessive risk-taking. The reward didn't drive the behaviour, it appeared to confirm that the behaviour was right.