The purpose behind the bailout was to strengthen the financial institution in order to forestall a complete collapse of the global economy as was the case during the Great Depression of the 1930s.The financial institutions on their part were expected to in turn ensure stability within the institution through their performance using the much needed fund to shore up their troubled assets.
This paper will attempt to show that bonuses received by top executives in the financial institutions, were within the ambit of the contract agreements between them and the financial institutions, irrespective of the consequences of such payouts pursuant to deontological considerations. It will also examine facts that agree with utilitarian reasoning where the negative consequences of large bonus payouts outweighed the positive outcome. These large bonuses did not align with increased performances. It promoted sharp practices and encouraged reckless risk taking on the part of top executives with the aim of gaining short term profit. It reduced significant and much needed earnings that can used to boost the regulatory capital of the financial institution. And most importantly, it did not create nor sustain long term investor interest.
The usual tradition is to merge organization goal into compensation programs or bonus packages, that is to say one is compensated based on his/her achievement for the company where such an individual has utilized exceptional skills and knowledge to increase... [continues]
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(2011, 03). Paying Out Large Bonuses to Top Bank Executives. StudyMode.com. Retrieved 03, 2011, from http://www.studymode.com/essays/Paying-Out-Large-Bonuses-To-Top-611449.html
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