| Hold financial institution earnings in escrow for seven years Position1 #7179 Financial institution earnings should only be recognised over a seven year period, and bonuses based on those earnings should be held in escrow until that seven year period is up. |
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Author: Mark Shuttleworth
Cited by: David Price 10:51 AM 13 October 2008 GMT
Citerank: (4) 7131Global insolvency / bankruptcyThe term “credit crunch” misleadingly suggests that the problem is merely one of confidence, that calm will return if liquidity is introduced to the system—when, in reality, the real issue is one of solvency and systemic bankruptcy.959C6EF, 7133Companies bought on borrowed money fail to service debtThere will be a steady flood of announcements of setbacks, restructurings and bankruptcies as companies that were bought with borrowed money, n the private equity boom 2003-07, turn out to be unable to service their debt.1198CE71, 7182Protect individual depositors in regulated banksDepositors in regulated banks should be protected by the governments that run the regulators.959C6EF, 128954Hold financial institution earnings in escrow for seven yearsFinancial institution earnings should only be recognised over a seven year period, and bonuses based on those earnings should be held in escrow until that seven year period is up.959C6EF
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Excerpt / Summaryhttp://www.markshuttle... "Executive compensation should be structured not fixed.
There has been a lot of discussion about limiting executive compensation. That’s just an invitation for armies of consultants and lawyers and accountants to work around whatever compensation limits are put in place. And frankly, I’m hard-pressed to understand how politicians, who constantly vote themselves bigger salaries and expense accounts, are qualified to set bank executive salaries. They effectively WERE in charge of Fannie and Freddie executive compensation, and that wasn’t a stellar success.
What I would say, however, is that financial institution earnings should only be recognised over a seven year period, and bonuses based on those earnings should be held in escrow until that seven year period is up. Imagine if we could now tap into the bonuses of investment bank employees over the past seven years in order to shore up the balance sheets of those banks. That would include the bonuses paid to Mr Fuld, Mr Greenberg, and Mr Greenspan. Anybody care to run the numbers? I think it would be material." |