This article casts an interesting light on bonuses. He sees them as a sort of bribe to persuade employees to behave in the interests of the firm. In many of these financial firms, traders and other key players have a huge amount of power as they can enter into trades and actions that are to the detriment of the company's interests. To stop them using this power to the detriment of the firm, they have to be paid a lot as a sort of 'efficiency wage'.
The question, for me, is do we think that an economic system that gives such individuals power to ruin a firm (or to make it prosper) by financial chicanery rather than by economic production a good thing? I don't and I think, to check the power of traders, checks and balances need to be introduced so that one person does not have the power to ring up huge losses for a firm.
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