Our post yesterday on America’s outrage over the bailout-paying-Wall Street bonuses certainly struck a chord: About 100,000 pageviews and 230+ comments and counting.
Today, we’re pleased to propose a solution:
Wall Street should pay all of this year’s bonuses 100% in stock.
That way, the cost will come out of shareholders’ pockets, not the taxpayers’ pockets (except via minor dilution of the taxpayers’ warrant stakes). Top management can pay stars whatever it feels they deserve, and employees won’t scream that wussy management just caved to public opinion. The firms will be able to conserve precious cash for capital ratios, acquisitions, and even loans.
If liquidity is an issue, the stock can be immediately saleable: If Wall Streeters think their firms are terrible investments at this level, they can drive the stocks down more by dumping their bonuses (and the tens of billions of bonus dollars will then be the equivalent of an emergency capital raise). If, instead, the employees believe the happy stories told by senior management, they can hang on and maybe double or triple their money over the next few years.
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