So say Paul Hodgson, Greg Ruel and Michelle Lamb authors of Wall Street Pay: Size, Structure and Significance for Shareowners (link) from the Council of Institutional Investors.

I'm surprised if you're surprised. Sample para:

"In the wake of the financial crisis, the structure of compensation on Wall Street has improved. Positive changes include:

- Substantially improved clawback provisions
- Longer deferral periods for pay, especially equity
- An increase in equity as a proportion of compensation
- A rebalancing of the fixed pay/variable pay mix to mitigate risk taking

Despite these beneficial changes, none of the banks in the study has addressed adequately the importance of tying compensation to long-term value growth. Some banks have increased fixed pay excessively. And the effectiveness of the banks’ stronger clawback provisions has not been tested."

The report has several ideas for improving matters. Unfortunately, none of these include the notion of tying compensation to creditors' long-term interests as well as those of owners of equity. Perhaps they thought the one follows the other.

But, as the report itself notes, better long-term incentives existed pre-crisis in many non-US banks. Yet they too - last time I checked - did not escape pain.

Sadly, a long, strong course of bonusoxifren that might nurture the principle of selling less to and investing more for clients looks a medicine (yet?) too bitter to stomach.

Cropped image is by RJ Matson and can be viewed in full (and purchased on the St Louis Today website

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The Chinese X-Factor

Thursday, November 18, 2010 | | 0 comments »

Sofa inertia recently caught me in front of X-Factor. I have to say if you can't cover Bananarama you should probably go back to the day job.

Came similar thoughts when confronted by this google ad for an "iPad Clone" whilst researching smart phones:

I'm sure Deng Xio Sam cuts a great deal; and it is innovation of a sort most people expect from China (if that is where Sam gets his stock). Thus which idle layman would have expected the results of this piece of research out today from the Dallas Fed:

"...To date, the U.S., Japan and Germany have been the global locomotives of ideas. The landscape is changing, however, with patent filings growing rapidly in the BRIC economies (Chart 1). China’s growth has far outperformed other countries, with a fifteenfold increase in patent filings since 1995. Brazil and India have also performed well, with an estimated four- and sixfold increase in patent filings since 1995."

Full report here. Shame the piece does not cut the patents by type/area.

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A link currently doing the rounds of finance blogs points to a WSJ article reminding us, via Melchior Palyi, that history repeats but with twists.

Here's another for Mr Palyi ran a nice line, inadvertently perhaps, in this field:

(1938 Journal of Farm Economics, Vol 20, No 1)

Course, so much as changed since then.

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