Tilburg University

I believe it is important to ditinguish between shares and options. Options incentivize managers to take risk; bank shares held by managers lead them to mitigate risk levels.
I believe it is important to distinguish between shares and options. I also think that it should be required that bank managers hold on to their shares for a longer period (until 1 year after they have left office). This would incentivize to make sure that their actions are conducive to the bank. Options incentivize managers to take risk; bank shares held by managers lead them to mitigate risk levels.
I consider the criteria to choose performance measures rather vague. In my view any performance measure used at the top levels should reflect long term value. We know from research that use of other measures (like non financials) are associated with, randomness, favoritism and lenience. It should therefore be required that the firm uses value based measures and if not that it can substantiate why the other performance measure is predictive of future value and how the firm took measures to assure that the subjectivity associated with the use of this measures does not turn into randomness or favoritism.
I consider the criteria to choose performance measures rather vague. In my view any performance measure used at the top levels should reflect long term value. We know from research that use of other measures (like non financials) are associated with, randomness, favoritism and lenience. It should therefore be required that the firm uses value based measures and if not that it can substantiate why the other performance measure is predictive of future value and how the firm took measures to assure that the subjectivity associated with the use of this measures does not turn into randomness or favoritism.
Jan Bouwens