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A time-honoured incentive plan for agents, by agents.

Financial services firms have long struggled with the distinction between ownership and service. A firm’s owner takes her reward from the investment of capital — cash that the firm uses to acquire kit, rent premises, pay suppliers and hire staff, all in the collective enterprise of selling things — goods or services — for a return exceeding that capital outlay. As long as the firm does that, it is making money and it's shareholders will see a return on their capital — simplistically, that net return, divided by the relative size of stake.

For this, an equity holder needs not do anything beyond ponying up the money and not asking for it back. An equity holder can’t ask for it back, indeed: the transaction by which it invested in the firm was a sale and purchase. The money has gone. What you have is a share. If you want out, you have to sell it to someone who wants in, and you’ll have to accept what they are prepared to pay for it. That, in turn will depend on how well the company is doing.

One of the things that capital buys is servants. In the modern argot, employees — though we think that an important nuance — namely servitude — is lost in that modern formulation.

In any case, an employee is paid for what she does. She is the inverse of an equity holder — she must move in the same way an equity holder may sit still.

In a perfect world an employee is paid a commission reflecting her contribution to the bottom line. This is easier to measure for some employees than others: for salespeople it is straightforward. For back office staff, less so. Legal officers especially so.

In any case the civilising forces of the union movement have long since intervened to ensure that all servants are paid a basic determined wage for their time at work.

Nonetheless a static wage for time spent is no great incentive for a servant to strive for excellence. The history of financial services employment practice has been the effort to engineer suitable alignments given the confines of employment regulation.

You can always offer staff the carrot of annual pay rises, but this has a ratchet effect: a servant whose work quality declines over time cannot really have her pay reduced — employment regulation makes this procedurally difficult. So payrises tend to be anaemic, hedged about by concern for the firm’s cost base should the business environment deteriorate.

On the other hand, should the business environment improve good staff disaffected by unimpressive payrises tend to be biddable by other firms prepared to pay more.

The alternative is “discretionary” compensation. For salespeople,