France has recently announced new policies that will curb the excessive compensation in the Banking industry including how bonuses are paid out. This was done in response to a challenge laid out by G-20 leaders in April. French President Nicolas Sarkozy also plans to push for tighter international rules at a meeting of global leaders next month.
I applaud the leadership taken by France, not only to tie bonuses to a 3-year performance plan (thus eliminating the short-term focus) but also challenge the G-20 leaders to take action. When you look at the amount of monies paid out in bonuses by Banks, the average person on the street can’t relate. How did Banks bonuses get to be so large? One reason is the Banks fear of losing top talent…so the bonuses get going higher. The Banks have lost sight in why bonuses exist in the first place. This misplaced use of bonuses has fueled the short-term focus and the general “greed” prevalent in the Banking industry. This greed is what caused this global recession in the first place. So, now that we’ve bailed out the Banks, they want to go back to status quo. I don’t think so and neither does France and Germany. If we’re going to learn anything from the banking crisis, we can’t incent the Banks to focus on short-term gains. France’s approach seems right on by tying bonuses to performance over a 3-year window...poor performance?, no bonus. Do you think Obama and the Federal regulators get this? I’ll be watching the results of next month’s meeting. I hope the US has the same passion to eliminate “greed” as it did to eliminate “clunkers”!
I applaud the leadership taken by France, not only to tie bonuses to a 3-year performance plan (thus eliminating the short-term focus) but also challenge the G-20 leaders to take action. When you look at the amount of monies paid out in bonuses by Banks, the average person on the street can’t relate. How did Banks bonuses get to be so large? One reason is the Banks fear of losing top talent…so the bonuses get going higher. The Banks have lost sight in why bonuses exist in the first place. This misplaced use of bonuses has fueled the short-term focus and the general “greed” prevalent in the Banking industry. This greed is what caused this global recession in the first place. So, now that we’ve bailed out the Banks, they want to go back to status quo. I don’t think so and neither does France and Germany. If we’re going to learn anything from the banking crisis, we can’t incent the Banks to focus on short-term gains. France’s approach seems right on by tying bonuses to performance over a 3-year window...poor performance?, no bonus. Do you think Obama and the Federal regulators get this? I’ll be watching the results of next month’s meeting. I hope the US has the same passion to eliminate “greed” as it did to eliminate “clunkers”!
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