The Governor of the Bank of England has weighed in to this never-ending debate:
“The succession of scandals means it is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored.”
“Compensation schemes overvalued the present and heavily discounted the future, encouraging imprudent risk taking and short-termism,” he said.
“Standards may need to be developed to put non-bonus or fixed pay at risk. That could potentially be achieved through payment in instruments other than cash.”
BBC News Website 17 November 2014 : Carney puts bankers’ pay in spotlight after misconduct shockwaves
He goes on to suggest that pay should be in the form of some form of bond which could be clawed back if necessary.
I think there is an easier solution. Read more…