Bonuses have reversed and are way down at virtually every firm. You have to give bonuses out to retain talent or else there will be a mass exodus to other shops. Also, just because the whole firm lost money does not mean that every group within the firm lost money.
I just read that CSFB is going to give their bonuses out in illiquid assets. Absolutely genius! The funny thing is, with the trader mentality of bankers, they will love this idea since they figure the asset is worth more than the book value. And the company saves cash.
The shareholders should sue everyone who got one of these bonuses. If it turns out that the profits were really fraudulent (caveat because I've seen "fake" profits where the reporting was mandated by securities law), they were mislead as investors by employees that benefitted from the fraud directly.
note: lesson not learned. the money these guys make is part of the problem, we're robbing other industries of talent and these guys get paid so much that they are pushing them to take stupid risks. why shouldn't they, in the end its not their money
So if a corporate farmer hires me and I give him a thousand seeds, will he give me a bonus based upon a thousand trees? Or maybe I don't even need the seeds if I have the promise (from getting a Masters at A&M) of bringing in a thousand trees.
The middle to lower level guys in IBanks (the VPs) count year end bonus as a very important part of their compensation. Most of these people make less than a plumber on a hourly basis. Of course you only hear about the top guys getting ridiculous amount of money.
I agree with just about everything in the original articles! Absolute robbery. The sense of entitlement at these places was obscene. Rewarding risk with little concern for long term viability. Stewardship of the business and and the client assets was completely absent. The dangers of excessive compensation for short term results. Saw this analogy somewhere else: If you walked down the halls of a business school today, do you think you'd find more people trying to build better business models and long term propsperity, or trying to emulate these investment bankers that destroyed their companies, their clients, and endangered the economy in general -- but collected tens of millions (or hundreds of millions) in the process?
I just spent several days at one of the major old-school big name Wall St. firms doing some work. Plummers deserve to earn more. They work quite a bit harder.
If they think they earn less then plumbers on an hourly basis -- then they're not very good at math. And that may be the problem! Plus the justification of the potential for large bonuses was the risk of not getting them.
You must have worked with some crappy bankers then, most ppl on the desks I know work 80 to 100 hours a week.
All I can tell you is what I saw, and I saw a bunch of really wealthy people in Armani suits putting in maybe 10 very laidback hours, (with maybe 1 or 2 hours on the weekend) and spending 3 of those hours talking back and forth about trivial crap like who won the Heisman and why. I expected what you describe and saw something very different.
Yeah it maybe a sign of the times, but when I lived in NYC, I used to always call my investment banker friends if I needed someone to look something up on the net b/c you could always count on them to be working....Most analysts out of college work around 80 hrs and effectively more if you take into account that vacations are non existent. Why do it? b/c of the carrot of being a VP, making a few hundred K and only working 50-60 hrs...most don't make it b/c you can only do something that devours your entire life (I hardly knew any VP/partners that weren't divorced at least once) for so long if you don't really love it..
Actually VP is just one step above analyst/associate, most people become VP after 3 or 4 years, the rest just wash out.
Um gee, for example there is the Wachovia teller in Charlotte who makes $25,000 who just got laid off. Tell her about CDO's and her eyes glazes over. There's the BOA treasury operations guy who just found out Ken Lewis "waived" him to trade for those from Merrill. He didn't have anything to do with sub-primes And did you know that Citigroup GTS (stands for Global Transaction Services) just made record profit? This year? As a matter of fact, they earned more in the last two months than they did the whole year. But while you take turns blaming Wall Street, GTS just cut base pay, waived bonuses and decided to cut jobs. "Good job. Now get out." There are millions of people working in the financial services industry, they must all be traders. But you know what, let's do talk about traders. In 2007, the top trader on Wall Street made $750 million for his firm. In one year. This year he didn't, so he probably won't get a bonus.
This is the furthest thing from the truth. When you talk about these bonuses, it impacts everyone....not just the big name CEO's. I work at a bank, and my bonus potential didn't push me to take any significant risks. I'm not even in a position to do that (not everyone is a trader). As others have mentioned already, for most...the bonus is in essence a part of our base compensation. If I didn't receive a bonus AT ALL then I would be making less at my bank (base + bonus) than I could somewhere else (strictly base). Yes, if my bonus is higher than I've exceeded what I could get somewhere else....which is why I work at the bank. Yes, I took the chance on making more so when our business goes into the tanker, then I should expect to make less. I'm sure you may make these arguments and you would be very justified. However, if there is no bonus at all I may be inclined to leave. My bank knows this, which is why they want to make sure they pay out bonuses or else they won't retain everyone. tulexan speaks the truth....
People still believe this nonsense. I've worked at companies where they have justified giving people ridiculous amounts of money by claiming they could not afford to lose them. Eventually the guy does leave and surprise surprise we manage to do just as well without him. The indespencible are very few and very rare.
There is nothing wrong with getting a bonus. The problem is when some of these people get ridiculously huge bonuses. Especially when the company is not doing that well.
But why would stockholders want that talent in the first place if the bonus structure encourages short term profits at the expense of long term profitablity.
Bingo. Tulexan is also right that not all depts within the banks did poorly. A couple of the majors had record-setting profits in several depts, those employees, despite making millions for their firms, were rewarded with an 80% DECREASE in bonuses this year. And the base salaries are crap, esp considering NYC taxes and cost of living. Trust me, I know. I'm moving to Jersey next month.
