JP Morgan

JPMorgan Chase & Co. has (unsuccessfully) tried to get permission from the Securities and Exchange Commission to exclude from its proxy statement a shareholder proposal that would require bonuses to be paid over a period of three years rather than as a lump sum.

The idea, put forward by AFSCME, is intended to tie bonus payments more closely to a long-term horizon for performance. Under the proposal that now must be included in the proxies, if performance slumps before the second or third installments of an incentive bonus, the bank will be able to make a cut.

If AIG had had such a system in place, the present controvery over its bonus system might be muted a bit. For the outrage isn't merely at the fact that "this is taxpayer money you're spending." The outrage at AIG, I think, has something to do also with the perception that bonuses pay good deal makers. It is the sheer making of the deals, and their quantity, that is often rewarded, not their long-term workability.

At any rate, if anyone involved in the AFSCME proposal is reading: congratulations. Your proposal seems to me to be an intelligent way of protecting the pensions of your members workingt hrough the existing proxy system.