Stephen Foley: Why we need bonus rules
Saturday 12 September 2009
US Outlook: Only on Wall Street could the phrase "guaranteed bonus" not be an oxymoron, and there is something so outrageous about the notion of pre-agreeing multi-year bonus packages that it has become a lightning rod for public over finance industry pay.
But we're getting distracted again. Lloyd Blankfein, the chief executive of Goldman Sachs, in his speech in Frankfurt this week, promised to ban the practice. Timothy Geithner, in a town hall meeting on Thursday, name-checked the guaranteed bonus as a particularly egregious problem.
Except that the real issue with Wall Street remuneration is not the guaranteed bonus, it is the unguaranteed bonus, the one that employees feel they have to shoot high and take big bets in order to achieve. Happily, Mr Blankfein had a little to say on this, too, promising to claw back bonuses in future years if initially promising bets went sour. And he promises more equity-based compensation for high earners, who might therefore be less inclined to bet the firm.
These limited proposals should not be enough to ward off tough regulation. The increasingly impressive Mr Geithner said Wall Street could not be trusted to govern itself, since the need to compete for staff tends to drive Wall Street to create dangerous pay structures. Only regulatory strictures will do.
- 1 Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
- 2 People all over the world are getting semicolon tattoos to draw attention to mental health
- 3 Van driver who comforted Clark Carlisle and called 999 after suicide attempt dies age 24
- 4 James Blunt was special guest on the highest-rating Top Gear episode ever
- 5 The biggest first date turnoff has been revealed
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...