(version in progress)
Behind the debate over the amount of the salaries of bosses and traders (which I will not go into here), lies the question of alignment of financial interest leaders with long-term interest.
There are three main types of tools for this:
- the market value of the company. We can give shares or equity derivatives, ie linking the financial interests of executives with stock price. The advantage of these tools is their simplicity (no complicated calculation to do what the leader has earned: just give him a percentage of the company, or options entitling him to a share of the company ). The disadvantage is that the interest of long-term business that is reflected in an imperfect share prices: they are highly variable, can be manipulated (a statement leader optimistic on the eve of its exercise of the option can save him millions) and do not reflect only the objective value of the company
- the company's profits. We can then give the officer not of actions but a non-negotiable (ie which can not be resold) dividends - which led to the financial interest of the leader is not the value action anticipated by the markets (which is a concept manipulated, volatile and limited by the ability of markets to accept a strategy), but the level anticipated by the leader of income of 15 years (which will lead him to actual project cost, rather than the market, with its mistakes, its bubbles and its difficulty understanding a complex strategy , atypical or bold, can be considered as such at any given time).
Thus the leaders of "partnerships" (such as Goldman Sachs or some law firms before the IPO) or shareholders "family" of unlisted companies are paid. A variant of this method of compensation is to compensate the action of an officer not directly cashable bonus, but additional pension rights, whose value depends the state of the company in 10 or 20 years. The advantage of this solution is that it does not resort to markets (and thus allows the officer to bring the relevant decisions but not easily understood by the markets, and prevents him from succumbing to fads and bubbles in the markets for more income to 10 or 20 years), the disadvantage is that this "tool" of a new genre does not enjoy the exemptions to which particular social stock options entitle.
- a discretionary bonus. Indeed, shareholders may still decide that the income will be directing a formula they can freely define. The bonus may be annual (if traders or vendors working on commission) or MAP (but difficult to implement in international groups because it involves tracking employees paid for their bonuses linked to their activity in their previous posts). The main drawback of this formula is part of a manager's ability to manipulate the terms on which it is held (it mastery in part on the thermometer where it will be considered) and, secondly, the that a specific formula, stock option, has a tax and social benefit as it is difficult to consider other routes.
The annual bonus is adapted to employees whose contribution is measurable on an annual basis (income trading, sales target, number of pieces made ,...), so that incentives are better suited to multi-year people whose contribution is difficult to measure by objective precise, or those for which they were waiting just find ways to increase corporate value.
For reasons of fairness and fiscal coherence, it would be difficult to make the third option (currently disadvantaged in comparison to stock options who fail to pay particular no employer social contributions) more attractive. Indeed, tax free bonus lead that companies are gradually transforming the fixed salaries as a bonus to reduce their taxes. We could discuss the merits of taxing wages (I personally think it's a bad tax base) - but from the moment you decide to tax it necessary to be consistent and taxing everyone fairly.
However, at a time when everyone is denouncing the excesses of the market, we might seriously question whether the tools much more favorable to the interests of long-term business that stock options could not be studied . In particular, the idea that leaders are rewarded for their performance in non-marketable securities rather than through stock-option deserves to be taken into account ...
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