The first, from Nassim Taleb, in today's New York Times, points out that bonuses are not the best idea when it comes to bankers taking on too much risk (here); the second, from Joe Nocera, showed up in today's Las Vegas Sun but isn't on the Sun's web page. It is on the New York Times's webpage (here).
Both op-eds remind us that it's important to pay attention to the facts: study the behavior of people whose compensation isn't linked to the prudence of their decisions (Enron, anyone?) to see if bonuses make sense; pay attention to the the factors pushing people toward strategic defaults on their mortgages and try to think of sensible solutions (reductions of principal) as a way out of the mess.
What doesn't work? Ignoring the facts. For example, check out Andrew Ross Sorkin's column today on the continuing saga that is the H-P board (here).
Boards that don't pay attention to actual performance before awarding incentives? Check. Bonuses not linked to actual performance? Check. Reasons why underperforming boards need to consider different ways of finding good new board members? Oh, about a few trillion.
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