Compensation: what now for cash vs stock split?

Some recent commentators have predicted that in the future the Securities Industry will pay a higher proportion of total compensation in the form of shares and options in order to stimulate a more risk-conscious behaviour pattern among staff. While this may sound plausible it does not necessarily make sense for the majority of employees in a securities firm.
Why should the government bond trader whose P&L is clearly visible at the end of each day and whose book does not contain any long-term risks be paid in instalments that only become due many years after he has produced the goods?The recent - and ongoing collapse - in the share prices of most brokerage firms and banks is in the majority hitting employees who did not have any influence on the poor decisions made by the senior management of those firms. To add insult to injury one could say that the top executives who have been asked to leave have done much better than those employees that are left behind and have to suffer the consequences of a rapid decline in the value of their company stock or share options that the ineptness of the departing senior managers has caused.

Kerviel Case: Where has all the money gone?

In all the excitement about the huge losses made by Soc Gen's Monsieur Kerviel and the bank's management one thing never gets mentioned: someone out there has made a whopping big profit out of all of this. Futures in particular are the ultimate zero sum game and where there is a loss there always is a profit. This is no consolation for Societe Generale and its shareholders who are left holding the proverbial bag but it should calm the nerves of politicians, economists and other commentators. Economically not much has happened except that a substantial sum of money has passed hands. Society as a whole is not poorer as it would be if the same sum of money would have been spent building pyramids - or steel plants that turn out to be surplus to requirement once they are finished.

Northern Rock - two key questions that need to be answered

The first question - and it has hardly been receiving attention in all the discussions of the Northern Rock saga that we are aware of - is the question of how it can be that in a so-called 'democracy' emergency legislation can be passed where the executive and legislative branches of government are in collusion and decide to 'nationalize' private property. The emergency support that the German Government has just decided to give to IKB Deutsche Industriebank in Germany (thanks to an obliging taxpayer that has no say in these arbitrary spending decisions) is just a less blatant form of nationalisation (where private wealth is taken away from its rightful owners and spent by politicians to spend on their favored constituencies).

The second question is again an indictment of Government, more specifically the quasi-governmental agencies that masquerade as 'banks' and are more commonly known as 'Central' Banks. In recent months untold (literally) billions of confetti money have been spent by these curious 'banks' in providing liquidity to the World's Banking system. No one will deny that Northern Rock used the leeway that is given by banking regulations to an extent that could with some justice be described as imprudent. But this is no excuse to provide all other banks with liquidity but let this particular bank hang out to dry. This was the crucial decision (mistake?) taken by the authorities back last summer and that has to be the point of departure when assessing the correct compensation for the Northern Rock shareholders. It simply is not good enough to destroy a business first and then base compensation on the situation that has been created by one's actions.