It’s official: all the top brass at the nation’s too-big-to-fail financial institutions are above average. Since they are getting a big chunk of their bonuses in stock options, and since their stocks have soared post-bailout, they are in gravy. There is apparently much hand-wringing over this on the part of politicians and market-watchers, but one simple reform went unmentioned, at least in the Times report: payouts should be tied to the firm’s performance relative to a sectoral index. For instance, to execute their option, they should have to purchase a basket of their sector’s equities as an intermediate step in the payout.
Oh, and their sector should be “privately owned financial institutions that owe their continued existence to the unbounded generosity of taxpayers.”