( CNN ) -- Here we go again . The perennial question of : `` Would you rather own shares in a major financial conglomerate or manage one ? '' comes up as JPMorgan Chase loses more than $ 2 billion in trading bets . The answer seems clear . If you 're an executive who manages the money , you 're likely to get a large paycheck and bonus even if you 're responsible for the loss , directly or indirectly . Jamie Dimon is still getting his $ 23 million . Shares of the major banks continue to trade well below book value and generate miserable performance metrics -- and have over the years been very poor investments -- while senior executives and key employees continue to walk away with vastly outsize earnings , even when they oversee massive losses . Shareholders certainly have reasons to object to huge executive pay packages , especially ordinary people whose fund managers have put in stakes of the bank shares in their pension and mutual fund accounts . But the level of executive compensation comes out of shareholders ' pockets . If shareholders are unhappy with the division of the spoils , they have no one to blame but themselves . After all , they can always take their money elsewhere if they do n't think their cut of bank profits is big enough . The real concern for everyone -- including regulators and taxpayers -- is not the level of pay handed out to executives , nor how profits in a company are divided between employees and shareholders , but rather , the incentives for risk-taking that bank pay apparently continues to create . Regulators have called for deferred compensation to address the incentive problem . If deferred compensation presents employees with serious exposure to potentially big losses , they 'll have a major stake in the long-term solvency of the business and help spare taxpayers the cost of bailing out firms that have become too systemically important to fail . But forcing employees to bear significant exposure to potentially big losses may come at a price . Employees may require higher salaries to compensate for increased risk . We 're seeing this reflected in recently announced pay packages . The price is paid primarily by shareholders while the benefits of any improvement in financial stability accrue to society as a whole . Deferred cash compensation makes employees debt holders , so it ought to reduce risk-taking . So should compensation in a form that explicitly converts to equity when the firm gets into trouble and is bailout-proof . Deferred stock compensation , however , may do just the opposite . As long as there are implicit government guarantees for financial institutions that are considered too big , too complex or too interconnected to fail , the value of those institutions ' stocks increases with risk-taking . The more risk a bank takes , the greater the value of government guarantees and potential bailouts . This value gets passed on to the bank 's stock price . If employees are paid in deferred stock , the risk incentives are then passed on to them , encouraging them to speculate . Rules that mandate more pay in the form of stock miss the point . It helps align the interests of employees and shareholders , but it fails to align their interests with those of taxpayers . Ultimately , it 's the taxpayers who are held hostage . They care about the size of bailout necessitated by excessive risk-taking taken by banks , and about economic growth , but not about how bank profits are divided per se , since they do n't get a cut in any case . Regulators are aware that bank stockholders have an overriding desire to take more risk than is good for society because chronic under-pricing of government guarantees makes it profitable for banks to seek risky assets and lever them as much as possible . This is the reason for capital requirements and the Volcker Rule , which tries to restrict risk-taking . Recent attempts to reform compensation overlook how complicated the compensation process can be . Trying to discourage risky behavior is like fighting an uphill battle against shareholders who like risk . Moreover , risk incentives are harder to measure , and their regulation is easy to circumvent . Criticizing the compensation packages of JPMorgan 's Dimon and his senior associates might be popular with voters , but regulators would be better off focusing on the source of the problem -- the mispricing of government guarantees that create perverse risk incentives in the first place . Pricing deposit insurance differently or banning activities such as proprietary trading would give shareholders and employees alike an incentive to rein in risk-taking . Employee compensation would then reform itself . The opinions expressed in this commentary are solely those of Ingo Walter and Jennifer Carpenter .
JPMorgan CEO Jamie Dimon gets $ 23 million pay package despite the bank 's $ 2 billion loss . Ingo Walter and Jennifer Carpenter : Real concern should not be level of executive pay . It is how much money they are paid, what their responsibilities are to shareholders ( i.e. ), and whether or not that compensation reflects actual value for shareholders. Focus on changing risk incentives rather than amount of pay , the writers say .