A very interesting idea on executive pay

December 18, 2008 | By Jim Kim

Credit Suisse gets the award for the most innovative solution to the problem of executive bonuses, in a troubled time. Bloomberg reports that the bank has put a lot of leveraged loans and commercial mortgage-backed debt in a so-called Partner Asset Facility. Executives and other employees will receive stakes in the facility as part of their compensation packages.

The facility will pay regular coupon payments. Their stakes will also be the first in line to absorb losses if the securities decline in value. The bank will provide leverage to the facility, and will be paid back first, Bloomberg reports. Will this payoff? Does it strike you as a gimmick? There may be some long-term value here, but perhaps not enough to keep employees tethered to Credit Suisse.

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