“Bonus is poison”

Posted by Marc Hodak on January 25, 2010 under Irrationality, Politics, Scandal | Be the First to Comment

So, you offered your investment managers an extra 50 cents for every $1,000 they make you as an incentive to better performance, i.e., more money for you.  Then you got the best performing investment management in the whole industry.  They earned you an extra $6,000, for which they are entitled to a bonus of $3.  So, now you:

A)  Increase the incentive to 60 cents–maybe the extra incentive will motivate even better performance going forward;

B)  Pat your managers on the back, and keep the existing incentive in place.  No need to get greedy;

C)  Ridicule your management for being paid a BONUS, calling it “unconscionable,” try to take away what they earned, and cancel the whole incentive program, and their cost-of-living increases to boot.

The state of Missouri chose C.

The title of this post is attributed to Gary Findlay, head of the investment management team that had performed so well, only to be berated for it by his ignorant, spineless bosses.

Addendum:  My wife considered the last comment unusually harsh for a sober blog.  I am willing to admit that I overstated my critique of Findlay’s bosses.  He has at least one who is not ignorant or spineless.

“By any objective standard, MOSERS is the best fund in the country,” said Senator Jason Crowell, a Cape Girardeau Republican who cast the lone dissenting board vote, according to the AP. He said the board should not change its policy based on “newspaper articles and political speeches,” and said taxpayers could ultimately lose money if the system’s rate of return fell because talented staffers left.

Thanks, Sen. Crowell, for standing up for reason against the thankless mob.