an idea long overdue...

[acroyear]

Editorial - Bankers and Their Salaries - Editorial - NYTimes.com:

Banks’ boards of directors, encouraged by their shareholders, must look hard at reforming the pay of top bankers. The core problem is this: bankers get stellar rewards in the good times and don’t have to give money back when their strategy sinks the bank a few years down the road. They might miss a bonus, or even get fired — and float down to earth on the “golden parachute” negotiated in the flush years.

One way to change this would be for banks to hold a big chunk of bankers’ pay in escrow, to be doled out over several years. A bigger share of a bankers’ pay could be made in restricted stock that can only be sold over a fairly long period of time. Golden parachutes could depend on good performance through the executive’s tenure.

Now, there’s a concept.

The same column notes that the feds in taking over Freddie and Fannie dismissed the multi-million dollar severance package the execs of those companies were to get from their contracts (regardless of performance).

Comments

[thatwasjen]

Bankers earn a lot of money so they're not tempted to steal ours, right? Maybe that quaint notion could be scrapped too.

[acroyear70.livejournal.com]

if bankers were paid strictly in stock grants, so the core cash they have until they are able to sell them (4 years vesting, yada yada) are the dividends (granted, a shitload of them), then maybe they'd have incentive to look a little longer than the next SEC quarterly filing.

so long as they get paid in huge sums of cash no matter what happens, there's no real incentive to make sure their decisions are for the long term health of the company (and by extension, the economy).