Such pay structures gave executives excessive incentives to seek short-term gains – say, by making lending and investment decisions that would improve short-term earnings – even when doing so would increase the risks of an implosion later on. Jesse Fried and I warned about this short-term distortion five years ago, in our book Pay without Performance. Following the crisis, this problem has become widely recognized, including by business leaders such as Goldman Sachs’ CEO Lloyd Blankfein. But it still needs to be effectively addressed: Goldman’s recent decision to provide record bonuses as a reward for performance in the last two quarters, for example, is a step in the wrong direction.