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Jedi Ninja · 03-25-2009, 02:58 PM

I agree that AIG gets somewhat picked on in this situation... however, I think the AIG incident has drawn badly needed attention to the issue of executive and bonus compensation as a whole.

Executive compensation has grown at astromical levels. The problem is that upper managers pretty much have control over the boards of directors and therefore set their own pay. Some shareholder rights groups have tried to draw attention to this situation, but the problem is the large number of absentee shareholders allows the system to continue.
Behavioural research has shown that the link between bonuses and performance is, if anything, negative.
Economic research has shown that executive compensation correlates to the size of the organization, but not to profit or other performance based measures.
Close to 100% of traders and potfolio managers receive some sort of bonus even though fewer than 50% of them beat the market.

03-25-2009, 02:58 PM	#20
Jedi Ninja Scoring Winger Join Date: Mar 2009 Exp:	I agree that AIG gets somewhat picked on in this situation... however, I think the AIG incident has drawn badly needed attention to the issue of executive and bonus compensation as a whole. Executive compensation has grown at astromical levels. The problem is that upper managers pretty much have control over the boards of directors and therefore set their own pay. Some shareholder rights groups have tried to draw attention to this situation, but the problem is the large number of absentee shareholders allows the system to continue. Behavioural research has shown that the link between bonuses and performance is, if anything, negative. Economic research has shown that executive compensation correlates to the size of the organization, but not to profit or other performance based measures. Close to 100% of traders and potfolio managers receive some sort of bonus even though fewer than 50% of them beat the market.