Saturday, January 31, 2009
Performance pay...getting your money's worth.
Performance is the "Holy Grail" of capitalism. To that end America is THE PROMISED LAND. However, what is in fact being rewarded on Wall Street is misleading at best. The cyclical nature of financial markets is a reflection of our overall economy. That being said, why is anyone receiving incentive based compensation, supposedly rewarding performance, for an economic climate for which they have absolutely nothing to do with? This argument applies to both sides of the market. Should individuals be credited for business profits solely attributable to a bull market or vice versa be penalized for bear market results? The short answer is they should not. Blame here is borne by Boards of Directors and corporate compensation committee's for their failure to clearly enumerate and reward actual performance. Whether industry averages or even broader benchmarks are used, incentive based compensation plans must account for the larger economic environment in which their company's operate. While most of Wall Street, or what remains, is being lampooned for the ill timed incentive payouts, the actual culprits reside on the Boards of Directors and Human Resource Departments.
Performance is the "Holy Grail" of capitalism. To that end America is THE PROMISED LAND. However, what is in fact being rewarded on Wall Street is misleading at best. The cyclical nature of financial markets is a reflection of our overall economy. That being said, why is anyone receiving incentive based compensation, supposedly rewarding performance, for an economic climate for which they have absolutely nothing to do with? This argument applies to both sides of the market. Should individuals be credited for business profits solely attributable to a bull market or vice versa be penalized for bear market results? The short answer is they should not. Blame here is borne by Boards of Directors and corporate compensation committee's for their failure to clearly enumerate and reward actual performance. Whether industry averages or even broader benchmarks are used, incentive based compensation plans must account for the larger economic environment in which their company's operate. While most of Wall Street, or what remains, is being lampooned for the ill timed incentive payouts, the actual culprits reside on the Boards of Directors and Human Resource Departments.
Friday, January 23, 2009
Resolution Trust Corporation, V2.0.2009...
Forget the untested scheme affectionately referred to as TARP! Tarps have but one purpose, and that is to cover things up. We should NOT be covering up the billions of dollars being directed toward bank after bank without any accountability. Congress does not need to reinvent the wheel here. During our most recent lapse in regulatory oversight, the RTC was charged with responsibility of cleaning up the Savings and Loan mess. Certainly not perfect, but accountable none the less. Yes, the RTC was largely accountable for spending huge sums of money that is currently unaccounted for under TARP. If we are really interested in accountability of our money, and we are not interested in testing unproven strategies, then Congress and the President will move to enact Resolution Trust Corporation, V2.0.2009.
Forget the untested scheme affectionately referred to as TARP! Tarps have but one purpose, and that is to cover things up. We should NOT be covering up the billions of dollars being directed toward bank after bank without any accountability. Congress does not need to reinvent the wheel here. During our most recent lapse in regulatory oversight, the RTC was charged with responsibility of cleaning up the Savings and Loan mess. Certainly not perfect, but accountable none the less. Yes, the RTC was largely accountable for spending huge sums of money that is currently unaccounted for under TARP. If we are really interested in accountability of our money, and we are not interested in testing unproven strategies, then Congress and the President will move to enact Resolution Trust Corporation, V2.0.2009.
Labels: Banks, Congress, Financial Industry, TARP, The President
