http://www.economist.com/blogs/schumpeter/2013/02/europes-decision-bankers-pay
European bankers now have a cap on the bonuses they can receive after their initial salaries. Even though negotiations with bankers is not an ideal thing for people to do it is a much needed checks and balances system that drives the economy towards more balance. By placing caps on these people the banking system can try and reload and restructure without banks losing millions in dollars of capital to the CEO's
2 comments:
I think it is hypocritical when CEOs talk about the need to improve their balance sheets, when at the same times they are making millions of dollars. However, I do believe in free markets and if million dollar bonuses is what the market decides is a fair wage to allocate to this profession then I believe that is the correct wage for the industry. It will be interesting to see what happens to the field as a result of these regulations. Will the best and brightest still go into banking or will they choose industries with less compensation regulation?
Austin,
I agree with your view on CEOs and the talk about their balance sheets. Despite the "market demand" for these bonuses, I think that many firms and CEOs could benefit the entire firm by lowering their bonus and using it to hire more employees, increasing salaries (or non-executive bonuses), or investing in another fashion. I get especially angry over bailed out firms or firms that have benefitted enormously from taxpayer money. Furthermore, firms that still have their CEOs that were in power when the recession hit should be holding off any extreme payment - I am not saying there salary shouldn't be competitive for that industry, but they do not need gigantic bonuses, mainly because their firm (basically) failed and had to be helped out by the government.
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