Posts Tagged ‘bonuses’

Digging a Little Deeper On the Subject of Wall Street Bonuses

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Expert Perspective by Grahall’s OmniMedia Editorial Board

There has been a flurry of articles recently on the expected bonuses to be paid to Wall Street employees.  The record breaking number for this windfall is as high as $144 billion (with a B) despite the tireless efforts by Messers. Dodd and Frank (and our other elected officials) to reform Wall Street while protecting Main Street.  But then Dodd–Frank Wall Street Reform and Consumer Protection Act was only signed into law in July a mere 3 months ago (the eye blink equivalent for “rule-making”).  Seriously, did anyone think that Congress could focus on reform and protection with mid-term primaries and November 2 elections before them?  It would have taken a bit more than even Christine O’Donnell’s “old black magic” to get than done!

Anyway, with Wall Street year-end bonuses looming (large) and no regulations to help determine what might constitute an “inordinately large payout”, other than from William Alden’s October 17, 2010 article in the Huffington Post Wall Street May Break Pay Record – Again) where “Federal Reserve general counsel Scott Alvarez [is quoted as saying]: “It’s very nuanced… There is no number.”  It seems, to borrow a phrase from Potter Stewart, once Associate Justice of the Supreme Court of the United States, “we’ll know it when we see it”.  Leaving the real question to be: Do we see it with $144 billion?
What is going on here?  That is a question we asked just a couple weeks ago in our blog Of Banks and Bonuses where we said that there were a couple of things at play.  That was an understatement – there are many things at play, and without tweezing them apart and thoroughly examining them – it is hard to say if $144 billion is obscene or not.

Yet theories abound. Here are some of our favorities. 

Perhaps with financial services restructuring, the remaining folks (a smaller group than before) all must work harder and the cost of compensating and retaining the “High” Q individuals is increasing in the market.  This is due to the departure of “process based” jobs, leaving banks and Wall Street with many more intellectually demanding jobs requiring judgment and decision making.  And the people in these tough jobs maydeserve to be better paid.  

Or maybe since Wall Street stocks are up in value (at least over last year if not over last month) and the hard working executives who have turned around these struggling entities (some with the help of taxpayer support) deserve to get some credit or at least some cash.

Perhaps with Dodd-Frank regulations still “in the can” and a chance that favorable tax rates will be repealed in 2011 financial services executives want to cash in now.

And, finally, maybe Wall Street is simply looking to recapture what they ”lost” in bonus payments last time around. 

More likely it is all these things and many, many more.  Remain assurd,  though, that regardless of micro economic, macro economic, global, local, political or any other issues at play, Wall Street has and looks to continue to take care of themselves.

Contact edie.kingston@grahall.com

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Of Banks and Bankers Bonuses: Is the News Good, Bad or Neither?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

So what is going on in Financial Services anyway?  One day you read that bankers will get their bonuses early (Newsweek: Banks May Dole Out Bonuses Early).  Then things sound grim when on another day the news is about Wall Street bracing for layoffs and lower bonuses (Huffing ton Post: Wall Street Braces For Layoffs And Lower Bonuses).  Then still more information comes out about the new banking rules and how they will reduce bank profits and therefore reduce bonuses based on profits (Wall Street Journal: New Bank Rules Good for Everything—Except Bankers’ Bonuses).

So is Wall Street suffering like Main Street or not?   There are a couple things at play here.
Continue reading “Of Banks and Bankers Bonuses: Is the News Good, Bad or Neither?” »

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The Big Money’s Back in Town

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Published in The New York Times February 24, 2010 

It’s about as official as it gets: the big money is back on Wall Street, Graham Bowley writes in The New York Times. Flush with record profits in 2009, investment banks and securities firms paid employees in New York City an estimated $20.3 billion in annual bonuses, according to a report released Tuesday by the New York State Comptroller. That was up from $17.4 billion for 2008. The tally, which is based largely on personal income tax receipts, provides a signpost for what has been one of the most controversial bonus seasons in Wall Street history.

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Wall Street Bonuses Get 17% Bounce

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Published in The Wall Street Journal February 23, 2010by Gina Chon

As financial firms rebounded last year, Wall Street bonuses for employees in the New York City securities industry rose almost 17% to $20.3 billion in 2009, according to a report released Tuesday by the New York State comptroller. That is compared to $17.4 billion paid in bonuses in 2008 after a record $42.6 billion loss in the securities industry. The 2008 figure reflected a 47% drop from what was paid in 2007, when securities industry employees received $32.9 billion.

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Anger Over Wall Street Pay Puts Spotlight On Directors

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Published on CNBC October 23, 2009 by Reuters

Outrage over the lavish compensation that Wall Street has awarded itself for doing a crummy job is likely to increase the focus and burdens on the people who set and monitor how pay is doled out: corporate directors.
The financial crisis has prompted demands by shareholders and politicians to rein in out-of-control pay, especially when it spurs bankers and traders to take too much risk.

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Goldman Sachs exec defends bonuses at ethics debate

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Published in Reuters October 20, 2009 by Georgina Cooper
Bumper payouts to bankers should be seen as part of a longer term investment in London’s economy, the vice chairman of Goldman Sachs International told a debate on ethics at St Paul’s Cathedral on Tuesday.
Defending lavish bonuses expected at the U.S. investment bank, Brian Griffiths said he was not “ashamed” of his bank’s compensation package, which has inflamed the bonuses debate.
The British public should “tolerate the inequality as a way to achieve greater prosperity for all” Griffiths said at the public meeting examining what role morality should play in the marketplace.

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Wall Street 40% Bonus Rise Feeds Spending on $43 Steak, Co-ops

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Published in Bloomberg October 20, 2009  by Martin Z. Braun 

40 percent jump in Wall Street bonuses this year may bring relief to New York City and Albany as the state and its biggest metropolis struggle with a combined $14 billion in budget deficits this fiscal year and next.
New York investment houses will dole out $26 billion in bonus checks by the end of March, said Alan Johnson, president of compensation consultant Johnson Associates Inc. The money will probably boost sales of multimillion-dollar co-op apartments and generate extra income-tax revenue for state and city governments.

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Bonuses Put Goldman in Public Relations Bind

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Published in The New York Times October 16, 2009 by Graham Bowley


A celebrated Goldman Sachs partner, Gus Levy, coined the maxim that long defined the bank, the savviest and most influential firm on Wall Street: “Greedy, but long-term greedy.”

But these days that old dictum is being truncated to just “greedy” by some Goldman critics. While many ordinary Americans are still waiting for an economic recovery, Goldman and its employees are enjoying one of the richest periods in the bank’s 140-year history.

 

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Showdown Looms Over AIG Bonuses

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Published in The Wall Street Journal October 14, 2009 by Deborah Solomon, Michael R. Crittenden, and Liam Pleven

The U.S. pay czar is clashing with American International Group Inc. over $243 million in retention bonuses, potentially sparking a showdown over the insurer’s compensation practices.
Kenneth Feinberg, the Treasury Department’s special master for compensation, has told AIG it should reduce $198 million in promised payments for 2010 and recoup $45 million already paid in 2009. The demands were made public in a report from Neil Barofsky, the special inspector general overseeing the government’s bailout.

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Wall Street On Track To Award Record Pay

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Published in The Wall Street Journal October 14, 2009 by Aaron Lucchetti and Stephen Grocer

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street’s pay culture.

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