[barrkel]

Bonuses are a poor incentive match for people creating and selling products whose performance may not be known for years to come; or may have expected average losses, but seem profitable until they blow up big. Bonuses turn into a reward for creating opaque products people don't know how to price and hiding information the market needs. Look up Abacus deal for example.

[MrMan]

The perverse incentives baked into the typical compensation structure are bewildering. I can only think that it is herding behavior, similar to the way VCs and other investors rain client money down on tech entrepeneurs who often cash out or throw the money away before their companies have been proved viable. Groupon is a top of the mind example. How could they have been allowed to just cash out when the company had current liabilities that needed to be paid?