Bonuses

Why are people so stupid about the bonuses at AIG? Aside from being a distraction from the orders of magnitude greater sums of money funneled through AIG to the usual suspect big banks, why does it have to be all or nothing? It seems to me that fixing the problem would be easy:

1. Limit cash bonuses to a fraction of salary, say 1/3.
2. Provide the rest in common stock that vests over the next 5 years, like many large corporations do.

The advantage here is that the cash payouts are limited, you give the recipient incentive to do a good job for the long term of the company, and you can have provisions that you lose your unvested shares if you leave, like most other unvested compensation.

Plus, in the case of AIG with the government having prefered shares, there's a real incentive to bring the company back to profitability... Unless the employees don't think the company will make it, in which case they sure as hell shouldn't be getting big cash bonuses.

What am I missing here, why wouldn't this work?