Vagrant thought: much is made of the fact that the AIG payments and their ilk, called "bonuses"
are nothing of the sort--they are just a form of compensation, alluring to the risk-averse skills investor who wants his money come hell or high water.
The question arises: why would anyone develop such a goofy compensation scheme? I suspect the obvious answer is that it is a fraud on the investing public: we pretend we are giving pay for performance whereas in fact we are doing nothing of the sort.
For a non-exclusive secondary answer, I suggest this: it's psychic income. All these macho poseurs (I'll bet the list is north of 97 percent men) like to think that they are Crocodile Dundee, whereas in fact they are just green eyeshade types, sleepy heads instead of killers. By calling it a "bonus," we pretend they are real risk-takers and they can get the same kind of high your eight-year-old gets when he puts on his Superman cape. Translated: to get them to take real risks, we'd have to pay them even more.
1 comment:
It's 3/08. Things are starting to look really bad at AIG FP. Is entering into a bizarrely risk-insensitive comp arrangement never before seen in a trading organization a pure cash-shovel to insiders before the end comes or a desperate but good-faith attempt to stem departures and save the organization? That's the factual issue that is fought out by smart lawyers in the courtroom of my dreams.
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