Stock Compensation and the Financial Crises

I suggest the article in the 9/27/2009 New York Times: "Did Bankers' Pay Add to This Mess?" at http://www.nytimes.com/2009/09/27/business/27stra.html?emc=eta1 .

Good column and thoughts on this topic that go against "conventional wisdom" that links compensation to risky executive decisions that caused the financial crises. Author writes that "there is no consensus among academic experts" on whether CEO compensation played a role in causing the financial crises. This may be true, but is not how it is usually reported in the media, debated in Congress, or evaluated at various regulatory agencies.

The column publicized research I had not seen before and the interview with the professor shows some of the logical flaws in the blame placed on compensation.

The SEC has proposed that companies discuss in their proxy statement how their compensation program may cause "imprudent risk taking."  

I submitted comments to the SEC on this proposal that reflect some of the views and attitude of the column. The comments are at: http://www.sec.gov/comments/s7-13-09/s71309-34.pdf . It will be curious to see what the SEC does with its proposals in the final rules.

Bruce Brumberg, Editor

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