Bankers’ Pay Locked Up: Why Not Lock Up Part of Coral Gables’ Management Salaries
January 6, 2011 Leave a comment
Why not lock up (say) 20 percent of the city manager’s salary, the financial manager’s salary and any other relevant functionaries’ salaries that have to do with good management and budget administration in the city of Coral Gables. Then release all or part of the salary the following years if work is satisfactory and the budget executed properly.
According to the Wall Street Journal, for 2008 there were nearly 5,000 bonus payments in excess of $1 million at “the largest US banks that accepted Treasury aid.”
Rather the push to constrain bank executive pay comes from officials and the political elite in continental Europe – supported by an increasingly effective pro-reform group around the Bank of England (led by Mervyn King, the governor). There is also supportive language in the Dodd-Frank financial reform bill, although this by itself rather vague and completely open to interpretation by the regulators.
Still, the overall proposal is entirely reasonable and well thought through at a general level: “lock-up” a considerable fraction of bank bonuses until we see, after several years, exactly how the banks do.