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Submitted by SS on
Your claim that executives were primarily paid in stocks, thus aligning their pay with shareholder interest is flawed in my opinion. You also have to look at how/when these stock/stock option pay can be converted to cash. If they are paid in stocks that they can cash out at exit, this would incentivize executives to prioritize short term stock gains and prop up exactly the sort of bubbles that led to the housing crisis by taking excessive risk. Short term gains would be preferred over long term health of the company under this pay scheme. I disagree with your claim that executive pay at banks did not, at the margins, contribute to the credit crisis.