Executive Compensation and the Financial Crisis: A Problem In Search of a Solution (Still) (Part 5)

by J Robert Brown Jr. for The Race to the Bottom, December 17th, 2010.

So, have things changed in the post-crises era?

As the CII Study noted, “the most significant changes were increases in deferred compensation.”  It is not, however, an auspicious shift.  Again, according to the Report:

  • Since we have already seen that vested stock on Wall Street was subject to more stringent restrictions than virtually anywhere else in the economy, moves since the crisis to defer pay longer and increase the proportion of pay deferred are not promising. Most of the banks appear not to understand that deferring pay over long periods does not by itself link pay to the long-term value growth of the company.

The financial institutions have not put in place provisions that are designed to link a significant portion fo compensation to long-term value growth.  In other words, compensation looks mostly to short term profits, the very approach that significantly contributed to the crisis. (continue reading… )

 

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