Quote:
Originally Posted by Ronald Pagan
Bonuses are tricky.
While they appear to be (and might well be) just glad handing and spreading the spoils to people who don't deserve them, they can be a good recruitment tool.
Arguably in times like these you need the best talent to manage your corporation out of a financial mess. Bonuses are a way to recruit that talent.
In a very competitive labour pool, companies will need to find some way to attract the best managers. Bonuses tied to stock increases are a preferred way to do that.
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Actually, there is a lot of research that shows that stock option bonus schemes only lead managers to take crazy risks in order to give the stock price a short term kick... Like writing a bunch of high risk mortgages. Also part of the culture of management today is that managers don't spend there entire career at one company any longer and therefore aren't concerned with long term issues. IMO, with a very few exceptions in venture-tech firms, managers should be given equity bonuses and not options.