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Bonus is usually paid out as a reward for short term goals, and that creates incentives to take higher risk in the short term. Total compensation does not have
by tyfon 10y ago
Bonus is usually paid out as a reward for short term goals, and that creates incentives to take higher risk in the short term.
Total compensation does not have this incentive.
I am a banker (although we are a startup bank), and for us the bonus is structured so that it is not paid in full immediately. Quite a bit is held back in case someone does something unhealthy to the company to reach their short term bonus goals.
This is not common practice though.
- lmm 10y ago> Bonus is usually paid out as a reward for short term goals, and that creates incentives to take higher risk in the short term. Total compensation does not have this incentive. If specific pay structures create bad behaviour then perhaps we should ban them, sure. But banning bonuses in general seems far too broad. How many people complaining about bonuses on this site have pay that includes stock or options - aren't those much the same thing?