Wall Street Bonuses Out of Control

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Bank of America Corp. is under pressure to scale back payouts after New York Attorney General Andrew Cuomo subpoenaed executives earlier this week for information on compensation and President Barack Obama said just yesterday that bonuses handed out by banks represent “the height of irresponsibility.”
The current system of “asymmetric compensation,” in which people are rewarded when they do well and aren’t required to return the rewards when they lose money, is detrimental to society and needs to change, said Nassim Taleb, a professor at New York University and author of “The Black Swan: The Impact of the Highly Improbable,” in an interview.
The worst economic crisis since the Great Depression, a $700 billion taxpayer bailout in the U.S. and the demise of three of the biggest securities firms -- Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. -- didn’t deter investment banks from offering year-end rewards to employees on top of their salaries.
Financial companies in New York City paid cash bonuses of $18.4 billion last year, the sixth-most in history, even as they posted record losses, according to data compiled by the office of state Comptroller Thomas DiNapoli. The payouts are split among everyone from managing directors to secretaries.

...
Unless Rubin and others are required to return their bonuses or are punished in some way, Taleb said a regrettable system emerges “where profits are privatized and losses are nationalized.”
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So - anyone naive enough to think that the Wall Street bonus system will really change?
 
It won't change with out regulations. We really need some kind of regulations on salaries/bonuses not being able to exceed a certain percentage of the corporations profits. If nothing else the regulations should at least be put on companies that have gotten bail out funds.
 
The government and Wall Street work together and our money is transferred to them. It's been like this for a long time, but the current situation just makes it even more obvious.
 
[quote name='dmaul1114']It won't change with out regulations. We really need some kind of regulations on salaries/bonuses not being able to exceed a certain percentage of the corporations profits. If nothing else the regulations should at least be put on companies that have gotten bail out funds.[/quote]

Sen. Claire McCaskill's (D-Missouri) got your back:

http://www.cnn.com/2009/POLITICS/01/30/executive.pay/index.html

Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee (of a company being bailed out by the government) would be allowed to make more than the president of the United States.

Obama's current annual salary is $400,000.
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~HotShotX
 
Spoiled bastards. I work for BoA (Countrywide) and we didn't get nothing for Christmas. No early time off on Christmas Eve, no cookies, a meal, a candy cane, nothing.

And I was all right with it because times are tough and I still have a well paying job.
 
I don't think the bonuses are the problem, though. The problem is when these CEO's leave or lose their jobs, they get A HUGE paycheck. Now I don't know how it works for the rest of the world, but when you lose your job, you're not supposed to get paid.

And no, I don't consider these bonuses in the strict sense.
 
Yeah, these CEO's are just crazy.

Giving themselves raises and bonuses during a recession, increasing their own expense accounts by $93k per year, per representative......its like they think they are congressmen or something.
 
[quote name='BillyBob29']Yeah, these CEO's are just crazy.

Giving themselves raises and bonuses during a recession, increasing their own expense accounts by $93k per year, per representative......its like they think they are congressmen or something.[/quote]

The current salary (2009) for rank-and-file members of the House and Senate is $174,000 per year.
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http://usgovinfo.about.com/library/weekly/aa031200a.htm

If CEOs were being paid an average of $174,000 per year I wouldn't care. Hell, if only their bonuses were $174,000 per year I wouldn't care. Look at the figures again - CEOs are being paid some pretty outrageous sums of money.
 
I think you forget one thing, though. CEO's can't raise their own pay (They have to ask the board, which they're usually buddies with, but still not in complete control there). House and Senate members can without authorization from another branch of Government. Albeit only for the next term, where in most cases they already know if they're getting re-elected or not. They also get housing as well as a lot of other benefits, including better social security (Privatized) and health care.
 
They're overqualified.. most have JD's from top law schools. People complain about our elected officials then whine if they're paid as much as first-year associates and blame them for accepting lobbyist gifts. If we paid them market value then maybe they wouldn't resort to selling their vote...
 
[quote name='Koggit']They're overqualified.. most have JD's from top law schools. People complain about our elected officials then whine if they're paid as much as first-year associates and blame them for accepting lobbyist gifts. If we paid them market value then maybe they wouldn't resort to selling their vote...[/QUOTE]

I'm sure they still would. If they want more money, stay in the private sector.
 
[quote name='Koggit']Lol.. seriously? Come on now[/QUOTE]

What makes you think they still wouldn't sell their vote? CEO's make millions of dollars and still steal money from their companies. If they seriously want to make money, stay in the private sector. I'm not sure what's so hard to comprehend here.
 
From what I've seen, congressmen tend to be greedy for popularity while corporate executives tend to be greedy for money (and they all lust for power)

It seems that we all agree executive pay is out-of-hand, the question now moves to what we can do about it. I like the idea of govt regulation in theory, I'm just concerned about how it could be implemented given the typical corporate finance bag-o-tricks. Either way, given the recent govt infusion of cash to banks, I think we the people have an unprecedented opportunity to pay bank CEOs the pay and perks that their recent performance merits.
 
[quote name='camoor']From what I've seen, congressmen tend to be greedy for popularity while corporate executives tend to be greedy for money (and they all lust for power)

It seems that we all agree executive pay is out-of-hand, the question now moves to what we can do about it. I like the idea of govt regulation in theory, I'm just concerned about how it could be implemented given the typical corporate finance bag-o-tricks. Either way, given the recent govt infusion of cash to banks, I think we the people have an unprecedented opportunity to pay bank CEOs the pay and perks that their recent performance merits.[/QUOTE]

I guess that's the my problem with raising a congressman's pay, I don't think that it would really work. They already know it doesn't pay as well as the private sector (although if those numbers are right for average pay, they're doing just fine), yet they still go into it, so it's not about the money. But to get back on topic, I do agree something needs to be done, I don't really understand how you can still get perks and bonuses when your company is going under, that just doesn't make any sense.
 
Top executive bonuses are not excessive. I do not agree with them recieving huge payoff's when a company is going into bankruptcy and doing poorly. The huge bonus and stock options they get are provided as a means for the shareholder's of the company to ensure that the executives work to meet the interests of the shareholders. The shareholders want long term growth and success, as well as current dividends. The pay scale is in place for a reason. The reasons are valid. It just needs to be changed slightly for instances when the company is sucking ass.
 
Right. Because someone could not do the same job for any less than $400 million in stock options per year. Because Robert Nardelli fucked over Home Depot so much they thanked him with a $213 million kick in the ass out the door.

We need a maximum wage in this country.
 
[quote name='HotShotX']Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee (of a company being bailed out by the government) would be allowed to make more than the president of the United States.

Obama's current annual salary is $400,000. [/quote]

I always wondered something- how does the President get his paycheck? They just direct deposit his Wachovia bank account and send him a paystub?

If so, it's now my personal mission to steal Barack Obama's debit card and PIN numb- *gack* :fridge:
 
[quote name='rmb']Top executive bonuses are not excessive. I do not agree with them recieving huge payoff's when a company is going into bankruptcy and doing poorly. The huge bonus and stock options they get are provided as a means for the shareholder's of the company to ensure that the executives work to meet the interests of the shareholders. The shareholders want long term growth and success, as well as current dividends. The pay scale is in place for a reason. The reasons are valid. It just needs to be changed slightly for instances when the company is sucking ass.[/quote]

The reasons are valid? So you think it's valid to have the CEOs doling out favors to the BOD in return for huge bonuses for the executive team? Is it fair for CEOs to poison pill efforts to oust them with self-enriching golden parachutes? Is it right that investors and employees have almost no recourse when CEOs and the BOD decide to enrich themselves at the expense of the people (as we've heard, even congress is powerless because the bonus packages and golden parachutes are "legally binding")? Do you really believe the best people for the job are being selected for executive team jobs, do you really think that class, money, status, and last name have nothing to do with these decisions?

Slight changes is all we've had so far and it hasn't had the impact we need. The mega-rich are never going to stop taking, independent investors and workers need better access to decision-making apparatus - the people deserve a say. What's more American then putting it to a vote? Why can't companies put out a ballot to investors asking what kind of bonus to pay the exec team and what to pay the average worker. It could be a percentage of stock price increase, or profit earned, explain all the formulae. Then exec teams could take it or leave it. Warren Buffet is only successful because he owns the companies he invests in - let's empower all investors big and small to make the truly important decisions, enough of only asking to pick between this blueblood ninny and that upper-class twit for entry to the BOD/exec team.

Don't the investors own a public company, shouldn't they be the ones making the most important decisions? You don't put a fox in charge of a henhouse, so why do we allow the mega-rich to collude with each other on how much money to raid out of publicly traded corporations.
 
[quote name='camoor']so why do we allow the mega-rich to collude with each other on how much money to raid out of publicly traded corporations.[/QUOTE]

Because anything less would be communism.
 
the real shame is the aig bonuses
as for bonuses at companies getting bailed out, it's a tricky bridge- I would like to see bonuses at the firms getting bailed out to switch from cash to stock options that are underwater. Say BoA, right now the stock is at $6. You would get stock options at $10 or $12. You would then have incentive to stay as well as a strong personal desire to improve the situation at the company. And if you continued to run the company into the ground, you wouldn't be getting anything.
 
The problem is the continuous transfer of money from ordinary citizens to Wall Street, Fortune 500 companies, etc.

They piss that money away at the height of the bubble, and continue to do so during the crash. What do you expect?
 
[quote name='mykevermin']
We need a maximum wage in this country.[/QUOTE]

Right. I say no one makes more than one million a year for work, and this includes pro athletes. It would piss them off, but can you imagine how the savings would trickle down to the fans-- cheaper tickets, hats, jerseys, hell the beer would be cheaper!

...

Okay, okay, could you imagine how the savings would trickle to upper management of the stadiums?
 
[quote name='rmb']Top executive bonuses are not excessive. I do not agree with them recieving huge payoff's when a company is going into bankruptcy and doing poorly. The huge bonus and stock options they get are provided as a means for the shareholder's of the company to ensure that the executives work to meet the interests of the shareholders. The shareholders want long term growth and success, as well as current dividends. The pay scale is in place for a reason. The reasons are valid. It just needs to be changed slightly for instances when the company is sucking ass.[/QUOTE]

Baloney. Your company is losing $40 BILLION and is bailed out by the taxpayers, but $15 BILLION in bonuses (out of the pockets of taxpayers) is "not excessive"? If taking billions of dollars in bonuses when your fantastic management style has resulted in near-bankruptcy isn't excessive, what, pray tell, is?
 
[quote name='rickonker']The problem is the continuous transfer of money from ordinary citizens to Wall Street, Fortune 500 companies, etc.[/QUOTE]

And when their schemes finally caught up with them, Hank Paulson, George Bush, Harry Reid, Nancy Pelosi, John Boehner and Mitch McConnell, to name the main culprits, gave them a further gift of $700 billion of our tax money. Good thing that has stabilized the economy....wait a minute.
 
[quote name='elprincipe']And when their schemes finally caught up with them, Hank Paulson, George Bush, Harry Reid, Nancy Pelosi, John Boehner and Mitch McConnell, to name the main culprits, gave them a further gift of $700 billion of our tax money. Good thing that has stabilized the economy....wait a minute.[/QUOTE]
The $700 billion served its purpose.




;)
 
[quote name='mykevermin']Right. Because someone could not do the same job for any less than $400 million in stock options per year. Because Robert Nardelli fucked over Home Depot so much they thanked him with a $213 million kick in the ass out the door.[/QUOTE]
That's always been one of those capitalistic paradoxes I can't get my mind around. I mean, if the system works, how on Earth could they not find someone willing to do it for $399 million and a $212 million parachute? Or for $398m/$211m? We're talking about millions of dollars in stockholder capital here. How can we reconcile a system like this when the rules of the system break down so brazenly at the top?

It's like a ponzi scheme except they don't even "promise" returns.
 
27339908fn6.jpg


 
[quote name='mykevermin']Right. Because someone could not do the same job for any less than $400 million in stock options per year. Because Robert Nardelli fucked over Home Depot so much they thanked him with a $213 million kick in the ass out the door.

We need a maximum wage in this country.[/quote]


I have to disagree with a maximum wage. As long as a company is financially sound, and not cutting grunts from the payroll despite overpaying management then it doesn't bother me.

But I do believe in a federally mandated maximum severence package for executives who fail or drive companies into the ground.
 
Yeah, maximum wage will definitely not fly in this country. Not saying that many people would be against it, but too many rich people with power could cause a lot of trouble for those politicians if they tried.

Personally, a maximum wage can fuck right off.
 
[quote name='Friend of Sonic']Spoiled bastards. I work for BoA (Countrywide) and we didn't get nothing for Christmas. No early time off on Christmas Eve, no cookies, a meal, a candy cane, nothing.

And I was all right with it because times are tough and I still have a well paying job.[/QUOTE]

This is the sad thing. I have heard far too many people say they are willing to take pay check cuts, benefit cuts or cut their hours. People are willing to sacrafice to help things along.....but in general they just get screwed and often fired while their boss gets a new car and a wife with new boobs.

This is why I dont feel bad saying the rich should be taxed at a higher rate, because its not just the fact that they are getting payed 10x what they should but they are also being showered with bonuses and they refuse to make any sacraficing for the good of their employees or America as a whole.

But hey thats ok. Whenever the nation collapses and we all run out of food I say we just bump up some Aerosmith and as the song says eat the rich.
 
[quote name='KingBroly']Yeah, maximum wage will definitely not fly in this country. Not saying that many people would be against it, but too many rich people with power could cause a lot of trouble for those politicians if they tried.

Personally, a maximum wage can fuck right off.[/QUOTE]

I'll say many people will be against it. I might as well argue that we place a hammer and sickle on the flag, and eliminate the 50 stars. That's a joke.

But, yeah, it's philosophically contrary to the "unlimited wealth" idea of American capitalism. We all love the idea of unlimited wealth, because we don't think about how it comes at our expense, both in terms of increased cost and decreased wages and benefits.

How many people could have beneftted from Bob Nardelli's $213m golden parachute that he didn't fucking need, nor did he fucking deserve?

EDIT: Aerosmith should have died in 1977. Motorhead's "Eat the Rich" is a superior tune.
 
[quote name='elprincipe']Baloney. Your company is losing $40 BILLION and is bailed out by the taxpayers, but $15 BILLION in bonuses (out of the pockets of taxpayers) is "not excessive"? If taking billions of dollars in bonuses when your fantastic management style has resulted in near-bankruptcy isn't excessive, what, pray tell, is?[/quote]
I never implied that this was ok. I was just stating that executive compensation has a reason behind it. That is why these top exec's get stock options. These stock options are not available to collect for typically a few years. A top exec may get 100,000 shares but they are structured such that the exec may sell X quantity in 1 year, Y quantity in 3 years...... and so on. I was just trying to inform those that have no clue about executive compensation how it works. Obviously there are cases where it doesn't always work the way it should. Those cases piss me off as much as the rest.

Added: Camoor, tell me who elects the board of directors?
In most, but not all cases the board of director's is elected by the shareholder's. Many shareholder's never cast a vote so when those people get fucked they have no bitch as far as I am concerned.
 
[quote name='rmb']I never implied that this was ok. I was just stating that executive compensation has a reason behind it. That is why these top exec's get stock options. These stock options are not available to collect for typically a few years. A top exec may get 100,000 shares but they are structured such that the exec may sell X quantity in 1 year, Y quantity in 3 years...... and so on. I was just trying to inform those that have no clue about executive compensation how it works. Obviously there are cases where it doesn't always work the way it should. Those cases piss me off as much as the rest.

Added: Camoor, tell me who elects the board of directors?
In most, but not all cases the board of director's is elected by the shareholder's. Many shareholder's never cast a vote so when those people get fucked they have no bitch as far as I am concerned.
[/quote]

Added: Camoor, tell me who elects the board of directors?
In most, but not all cases the board of director's is elected by the shareholder's. Many shareholder's never cast a vote so when those people get fucked they have no bitch as far as I am concerned.
[/quote]

I had a long post and CAG fucking ate it. I swear this fucking forum DB is run by gerbils running in cages.

Long story short, when CEOs get record payments for utter failure, the system is broken. The BOD ballot system is not working, and your knee-jerk reaction is to blame uninformed investors.

I see it differently. Investors may not know how the latest BOD up for election will vote, even if they know the bastard is going to sell them out to the CEO for a lucrative contract, it's a stretch to think that the investor can successfully launch a write-in campaign against the corrupt BOD member.

Let the people vote on executive pay (and the BOD can provide regulation-defined options such as percentage of stock increase or percentage of sales). Let the people vote on whether a failing CEO should be outsted or given more time. Remember - the CEO works for investors, the government works for the people.
 
[quote name='speedracer']That's always been one of those capitalistic paradoxes I can't get my mind around. I mean, if the system works, how on Earth could they not find someone willing to do it for $399 million and a $212 million parachute? Or for $398m/$211m? We're talking about millions of dollars in stockholder capital here. How can we reconcile a system like this when the rules of the system break down so brazenly at the top?

It's like a ponzi scheme except they don't even "promise" returns.[/QUOTE]

There's no paradox because this is not a capitalist economy.
 
[quote name='rickonker']There's no paradox because this is not a capitalist economy.[/QUOTE]
If you have a wider point to make, then make it. That doesn't do much for me.
 
I like how some companies think they're going to skirt this law by giving out stock instead of cash.

We're over a year away from the beginning of the 2010 election cycle and the last two presidents have passed retroactive tax laws.
 
[quote name='mykevermin']"not to be living high on the hog" = $500K/year max.

Wow, and they said McCain was out of touch.[/quote]

I want to see a documentary detailing the plight of the wealthy.

1. Driving a new Toyota.

2. Sending kids to Tier 2 private schools.

3. 3 weeks of paid vacation.

4. 1 paid "seminar" in a resort per month.
 
[quote name='mykevermin']"not to be living high on the hog" = $500K/year max.

Wow, and they said McCain was out of touch.[/quote]

Indeed.
 
[quote name='fatherofcaitlyn']I want to see a documentary detailing the plight of the wealthy.

1. Driving a new Toyota.

2. Sending kids to Tier 2 private schools.

3. 3 weeks of paid vacation.

4. 1 paid "seminar" in a resort per month.[/QUOTE]
It should be done in the style of that MTV show about parents spending absurd sums on daughters' sweet sixteen parties. Watching daughters throw shit fits because the folks can only afford the 500 class BMW for their birthday would be awesome.
 
[quote name='speedracer']If you have a wider point to make, then make it. That doesn't do much for me.[/QUOTE]

In a capitalist economy, the government doesn't continuously transfer money to the financial sector, where it leads to massive golden parachutes and pay packages for CEOs.
 
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