Friday, 6 February 2009

Responsible Bonuses

Why such ridiculous criticism of banking bonuses? Of course we want bankers to be incentivised. We want them to focus diligently on not just repaying taxpayer’s money – which bailed them out - but profitable returns thereafter. What we don’t want is short-term cash bonuses based purely on a percentage of their department’s P & L account for the last 12 months. Lets leave that in the age of irresponsibility.

The government must insist that all bonuses are paid in share options, struck at today’s market prices and exercisable in two years time. That way, bankers have an incentive to build the business and grow taxpayer’s (and shareholder’s) money over the longer term. And if that individual should leave the business beforehand, they forfeit all such options.