Variable is not variable

I have had a wonderful week in Stockholm, but tomorrow evening in going back to Oslo for the fourth leg of the MBA. A couple of my friends have also gotten back from Mannheim which will be very interesting to hear about. Well, what have happened over the last week? Well, the Nikkei index in Japan hit a 26 year low. What is going to happen with the Japanese economy? their two-tier work force seems to be very split, where the "low-class-easy-to-get-rid-off" part seems to be hit big by a negative trade balance and struggling auto-manufacturers.

In Sweden, the international bank SEB raised the fixed portion of the salary of the top management and lowered their variable part (and then reversed the salary again!). Well, to me this signals one thing: The variable part was not variable - and seen as given and absolute. Variable payment, such as stock options, is not bad - when its used in the correct way: as an incentive for management to take actions and responsibility so that the corporation grows in a manner that is best suited for their owners. This could be done in loads of ways, such as weighing the stock towards an index and look at the perfomance vis-a-vis other bank stocks in Northern Europe... for example and see if SEB manages to beat the competition. There could be loads of ways to see this through, but.. well, all that their current actions signals seems to be a corporation out of touch and with incredibly stupid media advisors. Horrible.