50

times median income
Much has been written about the remuneration system at investment banks and the extent to which it contributes to excessive risk-taking and volatility in the financial markets.  There are also many who decry the inequities of pay in the American economy, with senior executives receiving compensation packages that are hundreds of times the income of lower ranking staff.  The resulting resentment between the 99 and the 1 percent has prompted some to call for measures to rein in pay and others to predict dire consequences for economic growth and stability.  In France, for example, the new Socialist President has proposed that senior executive salaries be limited to 20 times the earnings of the lowest paid worker in an enterprise.

 

In mid-20th century America, executive salaries were 30-40 times those of lower-ranking staff, yet were sufficient to attract and retain talent.  Since the InfraBank would be investing in long-term projects, not participating in the short-term, volatile portion of the financial world, it would be appropriate to limit senior executives’ total compensation to 50 times the median income at the bank.

 

One thought on “50

  1. I was surprised to find this formulation as I was searching for something else. Surprised because, though I do not have a lot of time for research outside my “day job” — I had independently reached the same conclusion about the 50 concept — exactly the same. Greed led to massive dislocation not seen since 1929. And, at the moment, we have placed few, if any, genuine bulwarks against it happening again. What individual can justify the need for millions of annual income while her or his employee struggles for a lifefitme to retire with a single million in savings.

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