May 23, 2011
As a financial planner, I am writing because my family and my clients were adversely affected by the avoidable economic collapse of 2008, and we do not want it to happen again.
One way to change the incentives so Wall Street doesn’t collapse our economy again would be for regulators to force a delay for all compensation above and beyond salary. Just as with stock options, all bonuses, options, etc. would be escrowed for five or ten years and only released upon a fixed set of criteria: e.g. specific long-term goals continuing to be met. If such goals are not met or deteriorate, then the escrowed compensation becomes forfeit.
Another possibility, perhaps in combination with the escrow account, would be to tie non-salary compensation directly to shareholder dividends. If dividends represent a 2% yield, then non-salary compensation is capped at 2% as well.
Also, limit salaries and/or total compensation to no more than 200 times the total income of the lowest paid employee, including subsidiary employees, foreign employees, sub-contractors, independent contractors, and other statutory "employees."
Finally, re-introduce Glass-Stegal, break up the big banks, and create truly independent boards.
Thank you for considering my comment,
John Girvin, CFP