[p2p-research] AIG bonuses: the end of instant gratification?

[marc fawzi]

I was watching this
video<http://www.huffingtonpost.com/2009/03/18/obama-on-aig-the-buck-sto_n_176423.html>of
Obama talking about the AIG bonuses and I caught him saying that he
wanted the bonuses to be based on performance, as if they are based on the
lottery now.

A worker's individual performance can only be estimated subjectively in
terms of how it affects the company's performance, especially for large
corporations where there are a great number of contributors to each gain or
loss and a great degree of inter-dependency between the workers.

A worker's performance metric is like a peer trust metric in that it is
prone to being gamed/rigged both deliberately or inadvertently.  That is
true of any subjective metric.

The only thing in Obama's statement that makes sense (which he can be
excused for not explaining in detail) is if we were to keep the bonuses and
pay them only 5 years after the worker's exit (when the worker leaves the
company) based on the average of the company's performance (measured  in the
period of the worker's employment + 5 years. For example, those who left AIG
prior to mid 2003 the bonuses would have much higher bonuses than those who
are leaving AIG now or who will leave it in the future (due to the abysmal
effect of the 2008 collapse on the company average performance.) It's not a
perfect solution but if that's what Obama meant when he said that it's not
fair that "people make $6M bonuses when things are good and then get bailed
out by taxpayers when things are bad" then I think it could lead to a more
fair system.

Marc
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