Thought you might want to know.
Tag Advice
Should Banks Continue Their Massive Bonus Structure?
Maybe banks should consider the words of Carl Icahn, who recently resigned as a Yahoo! Board Member, when deciding whether they should continue their bonus structure for investors:
Several years ago, I bought a big chunk of ‘distressed’ debt in a major company and landed on the creditors committee when it filed for Chapter 11. Shortly thereafter, the bankers who were hired by senior management told me that I would have to pay retention bonuses to keep its top managers from leaving.
The company, they warned, would crumble if these star managers left. Nine had already threatened to march out the door if they didn’t get substantial bonuses. I told them I was fed up with retention bonuses. Where was the line waiting to hire these “star” managers who were responsible for bankrupting the company in the first place?
… To make a long story short, we eventually replaced these allegedly irreplaceable managers and restructured the company. The net result? We saved $500 million in costs over two years and the company is in much better shape today than is has been in years.
What is great advice for AIG and the US bail-out, certainly also works for the still struggling UK economy. Luckily we online already see a turnaround. Hopefully it won’t take two years for the UK gouvernment to realize. Two years, just as long as it took them to see the crunch arrive and realized it had already hit them in the face. Politics.
