Comments on: The curious task http://cafehayek.com/2009/10/the-curious-task.html where orders emerge Mon, 16 Jan 2012 02:06:33 +0000 hourly 1 http://wordpress.org/?v= By: Methinks http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184765 Methinks Wed, 07 Oct 2009 15:48:00 +0000 http://cafehayek.com/?p=6762#comment-184765 Basically, for the best employees, the vesting period is not an issue. The only employees hindered by a vesting period are ones that are not in high enough demand to have their bonuses bought out by a competing firm. So, what is the pay commissar really accomplishing by tying the dudds to the firm more tightly? Basically, for the best employees, the vesting period is not an issue.

The only employees hindered by a vesting period are ones that are not in high enough demand to have their bonuses bought out by a competing firm. So, what is the pay commissar really accomplishing by tying the dudds to the firm more tightly?

]]> By: Methinks http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184762 Methinks Wed, 07 Oct 2009 15:40:00 +0000 http://cafehayek.com/?p=6762#comment-184762 That's right. But, that's not a loophole. That's the market valuing employees. Non-Wall Street firms also buy out bonuses to lure employees who are tied to such pay schemes in their current job. The only people who are really hindered by the vesting period are the people who aren't in high enough demand for another company to buy out their bonus. So, what is the pay commissar really accomplishing here? That’s right. But, that’s not a loophole. That’s the market valuing employees. Non-Wall Street firms also buy out bonuses to lure employees who are tied to such pay schemes in their current job.

The only people who are really hindered by the vesting period are the people who aren’t in high enough demand for another company to buy out their bonus. So, what is the pay commissar really accomplishing here?

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184749 Anonymous Wed, 07 Oct 2009 13:06:00 +0000 http://cafehayek.com/?p=6762#comment-184749 <i>"There are no loopholes around the vesting period and If you leave the firm before the vesting period, you forgo that bonus. That's why when firms hire desirable candidates they 'buy out' the bonus. No loopholes required. Market forces will be what they will be."</i> So ... there are no loopholes around the vesting period ... but you can get another firm to buy-out the bonus? If the deferred compensation can be valued by a third-party and bought-out before it has matured -- then it can be converted into present-day dollars. “There are no loopholes around the vesting period and If you leave the firm before the vesting period, you forgo that bonus. That’s why when firms hire desirable candidates they ‘buy out’ the bonus. No loopholes required. Market forces will be what they will be.”

So … there are no loopholes around the vesting period … but you can get another firm to buy-out the bonus?

If the deferred compensation can be valued by a third-party and bought-out before it has matured — then it can be converted into present-day dollars.

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184744 Anonymous Wed, 07 Oct 2009 08:33:00 +0000 http://cafehayek.com/?p=6762#comment-184744 "Least not in a free society." Let me know if you find one. In the mean time, I'm busy forking over half of my depreciating earnings to a master who then uses it to squelch my values. “Least not in a free society.”

Let me know if you find one. In the mean time, I’m busy forking over half of my depreciating earnings to a master who then uses it to squelch my values.

]]> By: Ray Gardner http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184741 Ray Gardner Wed, 07 Oct 2009 05:08:00 +0000 http://cafehayek.com/?p=6762#comment-184741 Tsk tsk friends. We've already devolved into discussing the proper way to structure the executives' pay. It's not the proper role for the state to decide such things. Period. Least not in a free society. Tsk tsk friends.

We’ve already devolved into discussing the proper way to structure the executives’ pay.

It’s not the proper role for the state to decide such things.

Period.

Least not in a free society.

]]> By: louh http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184733 louh Tue, 06 Oct 2009 22:51:00 +0000 http://cafehayek.com/?p=6762#comment-184733 Is there an logical economic reason for their behavior, or are they just acting irrationally again. And do they believe that private industry will not look for an out. They(private industry) will play their best response, count on it. Is there an logical economic reason for their behavior, or are they just acting irrationally again. And do they believe that private industry will not look for an out. They(private industry) will play their best response, count on it.

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184731 Anonymous Tue, 06 Oct 2009 22:38:00 +0000 http://cafehayek.com/?p=6762#comment-184731 <blockquote>... employees under his authority ...</blockquote>If employees under Obama's authority don't like being under his authority, they know where to find the door. I'd be happier if Obama paid these guys in sea rations, poorly.

… employees under his authority …

If employees under Obama’s authority don’t like being under his authority, they know where to find the door. I’d be happier if Obama paid these guys in sea rations, poorly.

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184714 Anonymous Tue, 06 Oct 2009 19:53:00 +0000 http://cafehayek.com/?p=6762#comment-184714 You're using the Constitution as a legal standard? How quaint. You’re using the Constitution as a legal standard? How quaint.

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184711 Anonymous Tue, 06 Oct 2009 19:42:00 +0000 http://cafehayek.com/?p=6762#comment-184711 Actually, it's strange. I don't like Mises very much, and the word "praxeology" is aesthetically displeasing. Is sounds like it could be an insult or a disease. Actually, it’s strange. I don’t like Mises very much, and the word “praxeology” is aesthetically displeasing. Is sounds like it could be an insult or a disease.

]]> By: tw http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184703 tw Tue, 06 Oct 2009 18:13:00 +0000 http://cafehayek.com/?p=6762#comment-184703 Not a problem for the politicians...they'll just "increase tax rates on the rich" to account for the lower income. Not a problem for the politicians…they’ll just “increase tax rates on the rich” to account for the lower income.

]]> By: bstruck http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184701 bstruck Tue, 06 Oct 2009 18:12:00 +0000 http://cafehayek.com/?p=6762#comment-184701 Since when did bondholders begin to have voting rights? I thought that was reserved for people with an equity position (stockholders). Perhaps the Banks should begin to regulate the salaries for councilmen and governors of the various municipalities, after all banks are the primary holders of municipal bonds. As a matter of fact, maybe they should extend this principle to all the U.S. government debt that banks own, or even to local businesses who look to banks for short-term financing. Since when did bondholders begin to have voting rights? I thought that was reserved for people with an equity position (stockholders). Perhaps the Banks should begin to regulate the salaries for councilmen and governors of the various municipalities, after all banks are the primary holders of municipal bonds. As a matter of fact, maybe they should extend this principle to all the U.S. government debt that banks own, or even to local businesses who look to banks for short-term financing.

]]> By: Sam Grove http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184683 Sam Grove Tue, 06 Oct 2009 16:43:00 +0000 http://cafehayek.com/?p=6762#comment-184683 <i>But man is a kind of matter that anticipates, prepares, second guesses, and calls bluffs; he responds to the plans of others by changing his own plans, and thus throws the expectations of progressives into disarray. The task of directing an economy of such matter -- already difficult -- is made impossible by the interplay between those planning and those being planned for.</i> Which is why man must be denied the opportunity to make his own plans. But man is a kind of matter that anticipates, prepares, second guesses, and calls bluffs; he responds to the plans of others by changing his own plans, and thus throws the expectations of progressives into disarray. The task of directing an economy of such matter — already difficult — is made impossible by the interplay between those planning and those being planned for.

Which is why man must be denied the opportunity to make his own plans.

]]> By: Methinks http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184669 Methinks Tue, 06 Oct 2009 15:28:00 +0000 http://cafehayek.com/?p=6762#comment-184669 Wall Street tries to variablize its compensation as much as it can. Nobody would ever work for the base pay, so for most bank employees bonuses are just the portion of compensation that varies with the bank's fortunes. For the lower level employees the "bonus" is only nominally tied to performance (as in - we can lower your comp if we don't like you). For high level employees and especially for people who directly generate a P&L, the bonus is much more tied to the amount of money they actually make for the firm. There are far more lower level employees, obviously. The usual pay structure is a base of $150K (which won't even rent you a decent apartment in NYC, let alone afford you a vehicle - especially not after paying the highest tax rates in the country) and then a bonus based on the amount you make for the firm. So, a guy making $10MM will have a base of $150K and the rest is bonus. It's different for officers of the firm - more of their comp is base. So, good luck to the commissar with his little plan. I can't wait to see how these Wall Street guys are planning to outsmart him. Wall Street tries to variablize its compensation as much as it can.

Nobody would ever work for the base pay, so for most bank employees bonuses are just the portion of compensation that varies with the bank’s fortunes. For the lower level employees the “bonus” is only nominally tied to performance (as in – we can lower your comp if we don’t like you). For high level employees and especially for people who directly generate a P&L, the bonus is much more tied to the amount of money they actually make for the firm. There are far more lower level employees, obviously.

The usual pay structure is a base of $150K (which won’t even rent you a decent apartment in NYC, let alone afford you a vehicle – especially not after paying the highest tax rates in the country) and then a bonus based on the amount you make for the firm. So, a guy making $10MM will have a base of $150K and the rest is bonus. It’s different for officers of the firm – more of their comp is base.

So, good luck to the commissar with his little plan. I can’t wait to see how these Wall Street guys are planning to outsmart him.

]]> By: Methinks http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184667 Methinks Tue, 06 Oct 2009 15:21:00 +0000 http://cafehayek.com/?p=6762#comment-184667 Pffft! Most of the institutions the Commissar is targeting already have such a payment scheme. A portion of the comp is already paid in restricted stock that vests over a period of 3 to 6 years. There are no loopholes around the vesting period and If you leave the firm before the vesting period, you forgo that bonus. That's why when firms hire desirable candidates they "buy out" the bonus. No loopholes required. Market forces will be what they will be. Pffft!

Most of the institutions the Commissar is targeting already have such a payment scheme. A portion of the comp is already paid in restricted stock that vests over a period of 3 to 6 years.

There are no loopholes around the vesting period and If you leave the firm before the vesting period, you forgo that bonus. That’s why when firms hire desirable candidates they “buy out” the bonus. No loopholes required. Market forces will be what they will be.

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184660 Anonymous Tue, 06 Oct 2009 14:51:00 +0000 http://cafehayek.com/?p=6762#comment-184660 Where in the Constitution is virtually anything that the government has been doing allowed and enumerated? Where in the Constitution is virtually anything that the government has been doing allowed and enumerated?

]]> By: Thomas A. Coss http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184653 Thomas A. Coss Tue, 06 Oct 2009 14:38:00 +0000 http://cafehayek.com/?p=6762#comment-184653 Like picking up mercury with your fingers. Like picking up mercury with your fingers.

]]> By: Thomas A. Coss http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184652 Thomas A. Coss Tue, 06 Oct 2009 14:36:00 +0000 http://cafehayek.com/?p=6762#comment-184652 Doesn't lower income produce lower tax revenue to the government? Now just how does that work? Doesn’t lower income produce lower tax revenue to the government? Now just how does that work?

]]> By: Thomas A. Coss http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184651 Thomas A. Coss Tue, 06 Oct 2009 14:34:00 +0000 http://cafehayek.com/?p=6762#comment-184651 Does this not produce less income for the government to tax? Now how is that going to work? Does this not produce less income for the government to tax? Now how is that going to work?

]]> By: Scott H http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184646 Scott H Tue, 06 Oct 2009 14:15:00 +0000 http://cafehayek.com/?p=6762#comment-184646 Of course, if the government would stay out of the bailout business, then the pay of the executives would be a matter for the owners of the entities to determine, as it should be. If the owners want to over or under pay their exec's, so be it. Of course, if the government would stay out of the bailout business, then the pay of the executives would be a matter for the owners of the entities to determine, as it should be. If the owners want to over or under pay their exec’s, so be it.

]]> By: Anonymous http://cafehayek.com/2009/10/the-curious-task.html/comment-page-1#comment-184645 Anonymous Tue, 06 Oct 2009 14:14:00 +0000 http://cafehayek.com/?p=6762#comment-184645 Shhhh. These rules are just for public consumption. There will certainly be several loopholes designed into whatever system is adopted.Did you know that you can avoid inheritance tax if you do a little planing and spend a few thousand dollars on a good trust attorney? If the law wasn't structured that way <i>everyone</i> would avoid the tax. That's not workable .If you have a real good attorney and a business you can live very well and avoid all income taxes -- legally! Law is written to appear fair -- and gets really creative when it addresses reality. Watching how it's done can really be entertaining, and I expect this will be no exception. Shhhh. These rules are just for public consumption. There will certainly be several loopholes designed into whatever system is adopted.Did you know that you can avoid inheritance tax if you do a little planing and spend a few thousand dollars on a good trust attorney? If the law wasn’t structured that way everyone would avoid the tax. That’s not workable .If you have a real good attorney and a business you can live very well and avoid all income taxes — legally!
Law is written to appear fair — and gets really creative when it addresses reality. Watching how it’s done can really be entertaining, and I expect this will be no exception.

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