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If it is fair, high risk-effort tasks are stimulated more by a penalty than a bonus contract.
Just three years ago, he signed a bonus contract out of high school for $2.5 million.
The bonus contract language says that payments to people with outside income can be reduced by the amount of that income, according to this person.
It seems as though it would be pretty easy to upend a bonus contract that must read something like: "If you ruin the world economy, we'll pay you an extra million".
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Both signed record bonus contracts at age 17.
The president suggested on Monday that we just tear up those bonus contracts.
This study investigates how the weight on subjective performance measures and the achievement of bonus targets affect managers' distributive and procedural fairness perceptions of annual bonus contracts.
When negotiating bonus contracts, for instance, you might limit them to a year, if possible, rather than trying to predict what might happen many years down the road.
Specifically, the design of bonus contracts and the placement of the upper bound, and the effect of the Internal Revenue Code Section 162 (m) that limits the deductibility of cash compensation over one million dollars.
That, he suggested, undercuts A.I.G.'s claims that it could not renegotiate the bonus contracts agreed to early in 2008, and that the payments were "retention" bonuses.
This would put these gratuitous bonus contracts at the end of a long line of creditors who want their money back.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com