Thursday, March 11, 2010

Executive Pay on Wall St.

The best option I have heard so far is that of the escrow account. A trader puts on a twenty year trade and books a mark-to-model profit and gets a percentage as a bonus. The bonus instead of being held by the bank is put in an escrow account, with the same vesting period. Thus if the trade tanks, the bank can claw back some of the money, on the other hand the trader does not lose the bonus if he decides to leave the bank.

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