Executive bonuses

Mr. Hall (from Citigroup) is in the news. Should receive his 100 million dollar bonus for good performance. Difficult question these days. In today's climate, this might be a problem. Mr. Hall seems to think so. He is currently looking for an alternative job, probably at a company who did not receive bailout money.

I have a simple solution. Capitalism, which I support, should support companies paying bonuses in proportion to the money earned. However, the percentage of profit should be moderate. Mr. Hall generated 5 billion in profits for Citigroup in the past 5 years. 100 million is 2 percent of this total. This seems reasonable, *if* the profit is for work done in the past 5 years.

However, what if he loses money for the company one year? In that case, I believe the salary should be decreased by the same percentage, or he should owe money accordingly. Thus, if he lost 5 billion for the company one year, he would have to return 100 million dollars. In that way, it is the employee who pay the company for failure. This kind of rule would give the manager incentive to take less risk. Less gain, but also less loss. On the other hand, it would not prevent some managers from taking continued risk: the managers who truly believe they are good.