From the Wall Street Journal: The new rules from the Treasury Department permit Wall Street's "senior executives" to get incentive pay in the form of preferred stock that can't be cashed in until the taxpayers get their money back. But there s no rule yet against cashing all of it in at that point — what compensation experts call cliff-vesting.

Thus, managers may be tempted to take greater risks in hopes of speeding up their preferred-stock payoff. If the risks go bad, Uncle Sam will eat the losses. "It's the classic trader's option," says George Wilbanks, a managing director at executive recruiter Russell Reynolds Associates: "Heads I win, tails you lose." He adds, "That's my biggest fear: that people are going to swing for the fences to get to the cliff-vest faster."

Tags: Big Dogs, Cliff Vesting, Compensation Experts, Executive Recruiter, Fences, Losses, Managing Director, Preferred Stock, Quot, Russell Reynolds Associates, Senior Executives, Taxpayers, Treasury Department, Uncle Sam, Vest, Wall Street, Wall Street Journal, Wilbanks, Wsj

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