The argument for base salary is poor. Most of their compensation is pay for performance like employees that live on salary on commission. Bartenders work on a base salary of about $3/hr. The government should tax 90% of the salary above $3/hr ifor every Manhattan bar that serves these greedy bankers. After all, it doesn't matter how good a bartender they are. They should all make the same base salary. Ok, how does the guy making under $250k deserve to get his commission, but the guy that makes $250k deserves no commission? What incentive does he have to bring in more sales then the other guy?
Dammit, it isn't about that. It is about sticking it to somebody we feel that we can blame for this mess because they make a good salary (that won't get ya as far as you'd think in Manhattan). It is the beginning of the rise of the proletariat.
When you get a guaranteed bonus of say $500K which doesn't depend on you performing, the company performing...basically all you have to do is show up to work....what incentive is there for the person to bring in more sales at all?
I was not arguing in favor of the tax. I was just stating that there is some salary besides just the bonus. I've said before that the tax isn't constitutional.
But generally, that 500K does depend on performance. If you are not performing, you should be fired and the retention bonus contract should have been written in such a way that you forego any bonus when you are dismissed. On a much, much, much lesser scale, my son had a retention bonus of 10% at his company that was dependent on him: A. not quitting for a year B. not transferring out of his department for a year C. not getting fired for that year
That's definitely "performance based" in the strict definition of the words, but it's alot different from people who have to, for example, sell X widgets to get Y bonus. It's like someone who gets a grade for showing up to school all year and not getting kicked out.
These guys probably have a performance bonus too. Though I'd be surprised if any were paid out, given that the company is just trying to contain losses. That means AIG has to compete for people with other, healthier companies that will pay out performance bonuses, using only salary and retention (and inertia).
No disrespect, but since when is not getting fired equivalent to performing in a way deserving a bonus? I have managed 20 people on a team...and only fired one. That doesn't mean the other 19 performed. There were certainly the bottom of the barrel who would have been gone if someone told me i had to reduce my head count. I'm just saying, these retention contracts are dubious things. Not all companies use them...and actually it's most. Maybe I'm old school, but I think bonuses should be based on performing above and beyond expectations. Not parity. I mean, am I wrong to think this? I thought this was America.
Companies now use bonus pay as a way to get around paying taxes on salary. It is not areally a "tip" or "bonus" it is a variable salary that the company is not responsible for payroll tax on. Large companies have bonus scales based on salary. Everyone gets a bonus (unless you are fired or will be fired soon) but there are different tiers of bonus loosely based upon performance or peer evaluation.
The bonus part is making a commitment to stay for a year in your department without looking to transfer out or quit the company. This allows the department to generally not have to worry about bringing new people in. Some companies have departments that have a lot of turnover. This type of retention bonus tries to eliminate it.
Any bonus I have ever received has always been taxed just like any other payroll paycheck. If my bonus is $5000, my check is significantly less than that.
This isn't true. A company still has to pay all the taxes on a bonus. The only way to avoid payroll taxes is to pay a person as a contractor, but bonuses don't qualify for that type of pay.
The only way the bonus for an employee wouldn't be taxed fully is if the employee was already over the Social Security threshhold of $106,800 in FICA earnings for the year already. They will always be subject to the 1.45% for Medicare earnings. Generally, speaking, you may get a bonus check that isn't a payroll check, but the company still grossed up your pay so you could get that flat bonus amount, and didn't give you a check showing anything but the net amount.
This thread is irrelevant - the House bonus plan is basically dead, as it has little support in the Senate or the White House. But don't let me stop the fun....
