Can anyone provide a rationale for the bonuses that will not cause me to laugh out loud?

[Stinky The Clown]

I've heard the "we need to retain good people" and the one about "those who got bonuses were not in departments that lost money". Those aren't reasons. Those are punch lines to bad jokes.

If you lose your job and are in pure survival mode such that you are taking food stamps and AFDC and whatever is available to you from the public dole, do you pay into your IRA? Or give your kid a new car?

I have yet to hear a big bidniss bloviator make a sound case for the bonuses. Can soemone here, more rational than them and smarter than me, make the case? In a way that won't cause me to laugh.

[TimesSquareCowboy]

1. And don't buy the line "well, they're smaller than previously"

They all got massive bonuses in the last few years based on profits from packaging and selling subprime garbage. In my opinion, those bonuses should be recalculated and repaid.

[supernova]

2. Yeah, I'm thinking the same

They just look like fools every time they try to justify those bonuses.

[KansDem]

3. I think this whole bailout was one big "smash 'n grab"

I think it was to save the investor class, and nothing more.

[liberal N proud]

4. How they can say those things with a straight face is amazing

Retain good people, where are they going to go when everyone else is laying off people.

[CaliforniaPeggy]

5. I'd like to hear that too!

You won't though...

There are NO good reasons for those bonuses.

:grr:

[Jackpine Radical]

6. Easy. These are the guys who talked the pols into doing the bailout.

You think that was easy? You have to be very knowledgeable about the power structure and judicious in your bribes to make something as insane as that happen. These guys brought home the bacon. Then they demonstrated their mastery once more by persuading their boards to give them the big personal handouts. Just to--pardon the expression--keep their hands in, of course.

[ZombieHorde]

7. Let's see if you find this rational to be funny...

They never intended to to do anything with the money except line some pockets. Our Government was hoodwinked.

[islandmkl]

8. "..so much to steal...so little time..."

[barbtries]

9. "we're amoral greedmeisters"

true story. none of it makes me laugh; it makes me go looking for something i can laugh about, so i won't cry or have a stroke from frustration.

[KellyW]

10. Yes

See this article from Greg Palast
http://www.alternet.org/workplace/122767/john_thain%3A_corporate_jerk_of_the_moment/

here is an excerpt
"Thain was CEO of Merrill Lynch, the big brokerage firm. On a good day, Merrill is worth zero. A week before it was about to go out of business, Thain sold this busted bag of financial feces to Bank of America for $50 BILLION.

I'd say that's worth a bonus."

Basically, they did a great job of stealing public money.

[leftstreet]

11. It Trickles Down. You just have to wait

:silly:

[Stinky The Clown]

13. I'm sure it will .......

[HughBeaumont]

12. "Talent like ours doesn't come CHEAP!"

Ah, but crowbars, pitchforks and moltov cocktails from a mob of pissed off and laid off masses DO.

Keep up the bullshit, CEOs, and you're gonna find yourselves on the wrong end of them.

[Occam Bandage]

14. Sure: "Because they're greedy sons of bitches who know we can't do a damn thing."

Shouldn't laugh at that.

[HughBeaumont]

15. SSSSHHH! Don't want to be accused of "Class Warfare", do you?

It's astounding that the corporate water-carriers known as the MSM is STILL on the "punishing success" meme, even as their handlers suckle from the gub-mint breasteses.

[Phoebe Loosinhouse]

16. If they were the guys in charge of making sure that tires stayed on the car

and then every last tire flew off of every last car do you think they would get a bonus? Isn't that kind of what happened?

[zagging]

17. Laugh or cry

It's not your money, so you don't really don't get much other than an opinion.

[Stinky The Clown]

21. ....

:spray:

[Occam Bandage]

22. No, I'm pretty sure that is our money. nt

[zagging]

28. If it was your money, it'd be under your control

It's that simple really. If you can get it under your control, it's your money by hook or by crook.

[Occam Bandage]

29. So if I take your wallet, I have title to it?

[zagging]

30. Semantics aside...

If you are able to take my wallet, then you are probably able to spend the money in it, and likely will.

[Occam Bandage]

40. Sure. Does that mean it's right for me to do so?

Does theft justify itself?

[zagging]

42. You argue philosophy

I'll argue reality. If I take your money and use it for my purpose, it was my money all along.

[On the Road]

37. Most of the TARP Money

was used for buying preferred stock. So like any other investment, the government owns a piece of the company but does not directly control the cash.

Normally, preferred stock carries voting rights. But the government has declined those rights, so they formally don't have more than an opinion.

That does not mean the government has no influence. The Obama adminstration may be more effective using indirect influence like discouraging corporate jets than in launching shareholder actions.

[Dreamer Tatum]

18. I'll give you a couple

Believe it or not, there are portions of every Wall Street business that make money on every transaction. If Goldman lost billions on Investment A, it needn't be the case that Investment B is worthless.

If you work at Goldman (for instance), and a bonus is a the main portion of your compensation, it's reasonable to assume that if you execute your job as expected or better, then you will get that bonus.

The main arguments against bonuses seem to be:

1. They're too big, just because I think so;
2. No employee of any company that has received federal assistance should receive a bonus;
3. I do not like people who work in finance, so I don't want them to have a bonus;
4. There are people elsewhere who are losing their jobs, so why should someone somewhere else get a bonus;
5. I do not like anything having to do with Wall Street, so I feel hostile toward anyone who has anything to
do with it;
6. Bonuses should be tied to corporate performance, so everyone suffers when billions are lost;
7. Random, eyes-spinning invective directed at nothing in particular.


If you're an employee who has executed your job as expected or better, and you have no control over the machinations of the larger company, then the only compelling argument against a bonus is (6).

If you're an executive in charge of assigning and expediting bonuses, then the only compelling arguments against bonuses are (2) and (6), and perhaps (1), although bonuses are generally formulaic.

If you're in charge of distributing government funds and guarantees to Wall Street and banks, the compelling arguments are (1), (2), and (6).


The rest is just emotion and opinion.


As for keeping good people, that argument rings hollow on Wall Street, where people move around a lot anyway. The "good people" argument is solid in other places, however, like manufacturing and engineering.


My PERSONAL opinion is that if your company requires public help to stay afloat, then it is NOT business as usual, and bonuses should be slashed substantially across the board, or eliminated altogether in favor of salary increases.

[On the Road]

23. It is True That Individual Performers

may still deserve bonuses even when the entire corporation loses money. However, the bonuses most under discussion now are for top executives who have responsibility for the entire enterprise.

Your reason #1 ("just because I think so") could use some rephrasing -- it implies that proportionality is whimsical. In fact, there are many standards and benchmarks for determining fair compensation. None of them are exact, but by comparison to other industries, other nations, other decades, or other management levels, top executive salaries in the finance industry are completely out of range.

It's obvious the system is broken. Executive salaries are supposed to be approved by boards, but in practice the boards act as rubber stamps. The incentives are skewed toward inflation salaries. All of which mean they collect those bonuses because they can.

Ordinarily the government takes a hands-off approach to salaries, and that is normally a good idea. But now that the US owns $300B+ of preferred stock in banks, and is liable for hundreds of billions in FDIC insurance if banks fail (not to mention the whole economy), it has a compelling interest in intervening.

[Dreamer Tatum]

25. Many, many companies have a composite bonus structure

10% based on you, 30% based on your group, 50% based on the company, and some discretionary piece. Clearly, Wall Street doesn't have anything like that, or at least the company portion is severely underweighted. But then again, creative high finance is by definition subject to risk, and you could argue that your bonus as a trader shouldn't be affected by the losses incurred by someone fiddling around with other investments.

[On the Road]

32. Is There Something in the Published Information

that leads you to believe that there is a high individual component and that many employees have little or no bonus? You may be right -- I just haven't seen anything to indicate that.

I tend to think that what has been happening is what Robert Townsend described in the late 60s in Up the Organization, except that the process has accelerated since then:

President's Salary: (Is He Really Worth $250,000?)

Every couple of years at an otherwise routine board meeting, some outside director asks your chief executive to leave the room. Then he mumbles something about underpaid and proposes a raise to $250,000 a year, which is unanimously approved.

During the months that follow, the chief proposed raises for his various top officers and when the process is complete, they are all nicely in line with each other and with the average relationship between top officer's salaries of all large, medium, or small corporations....

Your key resource people may be engineers, designers, artists, city managers...(b)ut average them all out and they're making one fifth of what the chief executive gets....

The salary gap makes the key people frustrated and restless. And as the chief's salary edges up out of the earth's atmosphere, one of two reactions sets in:

1. Arrogant (since I'm so good, Id better see that all important decisions get the laying-on-of hands in my office before they're made). The company grinds to a halt and the zeal drains out.

or

2. Timid (I'm paid this much to make sure nothing goes wrong: so I'd better have a look at everything before it happens). The company grinds to a halt and the zeal drains out.

...Ideally, a new chief executive should negotiate his own compensation on a once-and-for-all basis before he goes to work.... (Otherwise) his directors and stockholders will usually prevail on him to allocate himself more than he deserves.

http://tinyurl.com/bqte5f

As CEO at Avis, Townsend insisted on a salary of $36,000 plus stock benefits, because the company was not profitable and that's what his division managers were getting.

The current CEO of Avis earned $1M in nominal salary and another $2.7M in other compensation. That's 15 times the inflation-adjusted figure, but comparable financial executives like Thomas Renyi of BoNY-Mellon make over twice that, even in a disastrous year like 2008.

Wall Street is not likely to adopt Townsend's approach, but it shows that there is nothing inevitable about today's salaries. The OP asked if there is a rationale for these salaries that is not laughable. So far I haven't seen one.

I'm not an anticorporate zealot. I have an MBA and am a Finance Manager at a large telecom. But I agree with the sentiment in the OP. The sheer magnitude of the bonus money is completely detached from performance. It is a way of management diverting resources to itself rather than the shareholders. People from Joe Biden down to Indymedia activists have a right to be upset.

[Stinky The Clown]

26. See now .....

.... your personal opinion is the only right reason among the many you cited.

This is not business as usual and were it not for the government bail out money, those business would all be bankrupt. And maybe, just maybe, without hope of recovering because AIG and others reneged on the loss insurance they sold ... and because they were doing little more than crap shooting with money they really didn't have.

[TahitiNut]

31. Did the non-exempt employees get a raise??

Or were they told "the company can't afford it this year"?? :eyes:

[Dreamer Tatum]

38. I'm going to hazard w ild guess that Goldman

doesn't have a lot of non-exempt employees.

[NorCalDem]

19. To be fair...

I can provide some explanation. Often times 'bonuses' on Wall Street are really just deferred salary. The employee takes reduced pay during the year, and a lump sum at the end of the year. This is designed to prevent traders from moving from firm to firm every few months; basically they won't get a 'bonus' if they move.

Now, that being said, the AMOUNT of these bonuses is absolutely, completely absurd. THIS is what people should be bitching about. In my opinion, each employee should have gotten a $1 'bonus' and a card reading "let's be smarter next year."

Again, it's not that bonuses were paid that bothers me, it's the AMOUNT of the bonuses that were paid that is troublesome...

[Stinky The Clown]

36. The only "Let's be smarter next year" I can forsee is one in which they ......

.... rename and restructure "bonuses" in a way that obfuscates.

[Oregone]

20. How about: they need to distribute earnings to stiff their rich, fatcat asshole shareholders?

Hm, I don't know? But maybe the old money asses, who live on interest and dividends of the money their great grand daddies earned with slave labor, now are seeing a tiny smidge less in dividends or stock growth because profits are being thrown away on ignorant business school graduates. Hell, in a way its a form of progressive wealth distribution. You know, the shareholder probably never normally have to work a day in their lives. The execs, although probably from wealthy families, still work and go to school, so its somewhat of a drain on that upper .001%. Yeah, ridiculous bonuses are just progressive wealth distribution!

[madinmaryland]

24. Guilianni said they were great for the economy of New York City.

Yes, you heard that right!! A noun, a verb, and no 9-11, from Rotten Rudy!

:wtf:

[ShadesOfGrey]

34. Yes, I just heard him say that too...

The bonuses will help these folks maintain their lifestyle of eating out, shopping, etc. and that helps the economy. PUKE!!!

[spanone]

27. we've been gamed

President Obama is right.....shameful

[closeupready]

33. I can't, so I'll let others try as I laugh myself silly!

:rofl:

[Avalux]

35. What I'm about to say will make you laugh HARDER (or make you cry)

Rudy Guiliani's justification for the bonuses - why they're needed, is that without them, New York City will go bankrupt. The city depends on Wall Street employees to spend their money in restaurants and buying things. :silly:

(someone upthread posted about Rudy, but I had to do it again)

[maxsolomon]

39. even though my projects were profitable this year

our firm layed off 20% of the staff & cut everyone's hours back by 10%, if not 40%.

we didn't get a bailout.

and guess what? NO BONUSES. FOR ANYONE.

[Horse with no Name]

41. Their bonus should have been that they got to keep their jobs

and didn't have to apply at McD's to flip burgers.