The problem here is two-fold:

1) Performance-based bonuses can include discretionary payments (regardless of meeting targets)approved by the compensation committee and board.
2) Shareholders are the one’s that lose because more options will be granted to make up for the up-front loss in pay.

Personally, I’d rather see the treasury department raise the level of non-performance-related salary deductibility to $2 million or more, increasing the front-end pay and decreasing the back-end pay. Then, if a CEO wants, he/she can buy stock on the open market, just like the rest of us.

The current structure is upside down in my opinion.

I surprised to see you go for the cheap shot sound bite. I can get that in the MSM. What I would hope for from you would be a more nuanced analysis of the situation.

The problems on WS are a combination of factors, which include economic policy mistakes (on a global scale), deregulation, lax enforcement of regs, poor risk management decisions on the part of WS management, and ultimately lack of long-term accountability both at the leadership level, as well as in some case at the employee level. Throw on top of that an explosion in new products and financial technology (i.e. derivatives) to amplify the effects of the above.

Wall Street is a mixed bag when it comes to talent. True, you have some dullards (usually the eye candy sales types who are good at sweet tolk and following orders) and these people are often simply carried by the tide, but for the most part, you really do have some extraordinarily talented folks. Many of them either don’t really need to work, or have enough put away to sit out this round for a few years, or have enough to go start their own business, or are extremely in demand at other firms that are not handicapped by the current crisis (and yes those do exist) or all of the above.

Additionally, there are many departments at WS firms that did make money the old fashioned way. They are the reason some of these firms didn’t lose even more money. Drive the talent away, and you might as well shut down the bailed out firms (which you might argue is what you would have preferred anyhow).

Lastly, some of the healthier firms were strong-armed into participating. Would you kill off those firms too? I guess our political establishment has done a pretty good job of redirecting attention and anger away from themselves and towards an easy populist target – those guys over there make too much money so they must be stealing it!

I just hope that in the process, we don’t throw the baby out with the bath water.

Rather than add fuel to the fire, how about some serious academic thinking about the source of our present state of affairs? And yes, if that sounded like a challenge – it was.

“maybe your sense of humor needs a bailout?”

That hurts, Ted…really hurts.

>>”This post was not meant to show my support of salary-caps.”

maybe your sense of humor needs a bailout?

>> “That’s the whole point…these problems were created WITH supposedly talented people.”

So out of the entire set of so-called “talented” CEOs, there exists a subset who failed at their jobs (for one reason or another). Therefore, the obvious solution is to deter the entire set of so-called “talented” CEOs from taking on these companies that are struggling.

Is that your point?

This post was not meant to show my support of salary-caps.