UK
Lunchtime Links: £200k pay limit?
10 October 2008
After this morning’s disastrous market performance in Europe, last night’s disastrous performance in Asia, and before this afternoon’s likely disastrous performance in the US, £200k may sound like a big paycheck. This is just as well, because as ex-banker Oliver Kamm at The Times points out, it makes sense for bankers who are being bailed out to earn less than the Prime Minister – and Gordon earns just £189,994. One hedge fund already seems to have gone for the pay cap idea. Financial News reports that Polygon Investment Management is capping partners’ pay at £100k. Any additions can be drawn from fund performance, but Polygon is currently down 19%, so earning more than £100k looks kind of unlikely at the moment.
“…if London becomes badly paid then there will be an exodus to Mumbai, Shanghai or Dubai." (Guardian)
Does a double-digit stock market fall over five minutes qualify as a crash? (FT Alphaville)
Morgan Stanley (and Goldman) on downgrade watch. (Bloomberg)
“Morgan Stanley has become a critical test case. If it pulls through, it would represent an important milestone in the search for a stock-market bottom.” (Wall Street Journal)
John Mack doth protest too much. (FT Alphaville)
Mitsubishi to buy Morgan Stanley stock at more than twice its closing price. (Financial News)
Oil companies forbid traders from dealing with Morgan Stanley and Merrill Lynch on liquidity fears. (Wall Street Journal)
“Let the competent banks take over the incompetent banks. Everybody starts over.” (Bloomberg)
Setting the stage for an inflation holocaust. (CNBC)
In the minute or so it takes you to read this post, Lehman Brothers’ senior bankruptcy lawyers could have earned nearly $16. (DealBook)
Icelanders start fishing again. (Wall Street Journal)
Robert Peston transformed into pure energy. (Daily Mash)
Anyone who has even done undergraduate economics will know about agency theory.
If you cap executive pay, then they will find other ways of getting value out, but less effficiently and less transparently.
For example, company cars, a more liberal view on allowable expenses, a nicer office, more "training" in exotic foreign locations, and the employment of deadbeat relatives and friends.
Dominic Connor, Headhunter 10 Oct 2008
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