ResourceWise

More on Pay Caps and Populist Rage

Compensation in these companies (especially investment banks) has de-linked from performance for many years. So fixing a cap on salary for the most out of control banks is not unreasonable. It helps manage expectations, calm the talent market and provide the institutions time to align their comp programs and practices with the long term prosperity of their respective organizations. Banks should grasp this opportunity with both hands and build sustainable programs. Just because a politician came up with the idea doesn’t automatically make it bad. Any value investor will know that it makes sense.