Wall Street executives och ersättningsregleringar efter krisen

"Intent on fixing a banking system that contributed heavily to the recent financial crisis, lawmakers and regulators pushed Wall Street to overhaul its pay practices. Big banks responded by shifting more compensation into stock, a move intended to align employees’ interests more closely with those of investors and discourage excessive risk-taking.

But it turns out that executives have a way to get around those best-laid plans. Using complex investment transactions, they can limit the downside on their holdings, or even profit, as other shareholders are suffering.

More than a quarter of Goldman Sachs’s partners, a highly influential group of around 475 top executives, used these hedging strategies from July 2007 through November 2010, according to a New York Times analysis of regulatory filings. The arrangements were intended to protect their personal portfolios when the firm’s stock was highly volatile, especially at the height of the crisis.

In some cases, executives saved millions of dollars by using these tactics. One prominent Goldman investment banker avoided more than $7 million in losses over a four-month period.

Such transactions are at the center of a debate over whether Wall Street executives should be allowed to hedge their stock holdings. The concern with hedging is that executives can easily break the ties between compensation and company performance. Employees who hedge their holdings are less concerned about a falling share price. That’s why the government barred top executives at banks that received multiple bailouts from using the strategies until they paid back the funds.

'Many of these hedging activities can create situations when the executives’ interests run counter to the company,' said Patrick McGurn, a governance adviser at RiskMetrics, which advises investors. 'I think a lot of people feel this doesn’t have a place in a compensation structure.'

More broadly, critics say, the practice of hedging represents another end run around financial reform."

Eric Dash, "Stock-Hedging Lets Bankers Skirt Efforts to Overhaul Pay", NYT 5 februari 2011

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UPPD 18 mars
FT hade i tisdags en intressant helsida av Megan Murphy och Patrick Jenkins om toppersättningarna i finanssektorn. Wall Streets snittersättningar gick upp sex procent förra året. Chris Roebuck, professor vid Cass Business School i London, säger till FT: "It's fair to say that nothung has really been done about the main problem... whether your average banker deserves to get paid this much". The problem has just been slightly rearranged."

Sir Philip Hampton, ordförande för Royal Bank of Scotland, hävdar att ersättningssystemet i grund och botten är sunt, och säger att: "There is a big objective reason why you pay people the way you do in banking: this is a serious professional job where people handle almost unimaginable amounts of money. Many banks will have balance sheets worth more than £1,000bn. That means that a single individual could be responsible for, say, £50bn of assets. With that proximity to much large sums, you want to make sure that your money is being properly looked after."

De som försvarar det rådande ersättningssystemet hävdar att finansinstitutionerna konkurrerar globalt om den bästa arbetskraften, och om reglerare tvingar ner lönerna på ett ställe så försvinner de bästa annanstans. I Schweiz tvingade reglerare ner bonusarna på UBS med 80 procent i krisen, och UBS förlorade då tusentals anställda till andra företag. På RBS i Storbritannien, som togs över av staten till 84 procent i krisen, hävdar VD:n att man förlorade 1000 "leading bankers" när man skärde ner på bonusarna.

"In the UK, high street icons such as Barclays and HSBC routinely threaten to leave if the government hardens its stance." I USA hävdar bankerna att om de blir mer reglerade så kommer stora pengar att flyttas över till mindre reglerad "shadow banking", såsom hedgefonder.

I både Europa och USA har regleringar införts för att göra bonusarna mer långsiktiga, med regler om mindre cash och mer utbetalningar längre fram i respons på att företaget går bra. Men själva storleken på ersättningarna verkar svårt att reglera.
Megan Murphy och Patrick Jenkins, "Ahead in the clouds", FT 15 mars 2011

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Uppdatering 12 augusti 2011
MIT-ekonomen Daron Acemoglu konstaterar att den explosionsartade okningen av lonerna i finanssektorn lett till att unga manniskors talang och intelligens inte anvants pa basta satt for samhallets utveckling:

"The explosion of salaries on Wall Street has attracted many of the talented individuals who otherwise would have gone into research, design, and engineering occupations. This flight of talented students to work in finance harms all of us because it means that we have fewer "positive spillovers" from innovative activities. The beneficiaries from Apple's innovation were not just its shareholders and iPhone users the world over, but also its competitors that are now building smartphones inspired by the iPhone, as well as the millions of consumers who now use Android-based phones. These spillovers from innovation imply that society gains when its best and brightest go into innovative sectors. This is what the U.S. economy has been able to achieve for decades but should not take for granted anymore. Allocating our best talents to finance risks damaging the long-term innovative capacity of our economy."

Acemoglu, "The Real Solution is Growth", Harvard Business Review Blog, 8 augusti