Per Bloomberg, the top 3 wall street firms are on track to increasing their total compensation to the bonanza year of 2007. Absurd does not begin to capture it.
NB to Ken Feinberg, as he wrestles with how to best align wall street compensation to performance: with aggregage compensation that high, it makes absolutely zilch of a difference in how you structure it. Obviously, a clawback for the whole pay package is an unrealistic condition to impose - one needs to put fuel in his Ferrari after all. Ditto for deferred stock compensation that vests in X number of years. That leaves the choice of cash, options and outright stock awards for the majority of that multi-million dollar bonus. And here's the thing: if I am getting paid that much, I frankly don't give a damn if the performance of my company suffers in the long term. The whole outlook becomes a short term one: make a killing for 3-4 years, then quit, cash in all of those options and stocks, and retire comfortably. Hell, the top dogs at Goldman could really afford to quick anytime they goddamn please: you can get close to a 4% yield tax free on a long term muni index, which, if you net $10 mil in a single year and stash it away, can enable a fairly comfortable lifestyle so long as you stay the fuck out of the money black-hole that is NYC.
At that point in the compensation scale, increments in compensation can only provide bad incentives. If providing for your long-term well being is no longer at issue, what would YOU care about? If the answer is of a "mine's bigger than yours" type - correcto mundo!
So, you want to encourage conservative investment behaviour at wall street banks, Ken? Start by making people fear about putting bread on the table. Prison sentences handed out willy-nilly could also do wonders, but you can't put every i-banker in jail, can you Ken? Can you?
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