Heard the story on the radio. I think that the details were that he made $4B trading for Goldman, he got a $10M bonus, and his name was Joshua. I’m okay with it, and to me, its no different than a sales commission. The story also said that avg. compensation for someone in “investments” 3 years out was $500K, that seems high by about $350K, but maybe I’m lost in the '90s…
Preparation for flame on…
I’ll bite *and *I’ll take what’s probably the unpopular side.
Yeah, he should get a bonus. He’s producing income and his contract will specify something along the lines of him getting 0.25% of the income that he brings in (it will be more complicated than this, I’m just simplifying to make a point). Anyone producing income should get entitled to industry standard bonuses. It’s not different from a person selling real estate, cars or clothing. You don’t get to these positions with displaying years of good results and it’s not a job that anyone could do, or that everyone would be prepared to do (if you think it is then you don’t understand what it takes to get there and what the job entails).
Of course the CEO, CIO, COO etc and anyone in management who is not directly producing income - if the company does not make a profit, they should get no bonus.
If someone signs a job offer and then performs he should be paid. If he is making someone a few billion, nothing wrong with million dollar bonuses.
If we give a company taxpayers’ money, the game changes until the money is paid back.
0.25% feels a little light to me…
…but he’s the one that accepted the position, he’s just gonna have to live with it!
All companies right now are stretching the dollar, any company thats taken bailout bucks should approach the employee and work out some other agreement. He can’t be the only one on deck to get a bonus like this.
Besides, if he’s making - i think someone wrote $350k - then giving him $10 mil ---- for doing his well paid job ---- is akin to UAW jobs banks stupidity. On the other hand, if he works strictly on commission…wait $10M is still absurd.
*** On the other hand, if he works strictly on commission…wait $10M is still absurd. ***
Scott, can I ask, what do you do for a living? No flame…I just need to understand your perspective on this one.
Thks. D.
I do construction management for a telecom company.
I know i’m probably way off base, i’m sure there is someway or someone who could justify this.
Anyone watch the press brief yesterday? The limits on CEO compensation, as written, affect maybe 5 or less people, and there are work-arounds. ...it's still a good bet they'll all be getting big pay. "Should" they will usually break down along political lines, with the most liberal saying noone needs that amt of money blah blah blah.
I have always tried to understand remuneration and and bonuess at this level of work. I get it that whne the CEO or what ever high level exec really ads value to an organization they should be rewarded accordingly. That makes sense. But then you here also about CEO’s and high level execs getting signing bonuses and also getting bonuses for being let go . . . and so on.
I figured I should try some of these tactics the next time I am in job search mode and down to that final salary negociation with my employer. “Great!. I like all of it. However, I am going to ask for a X-thousand dollar signing bonus as well, if I should be let go for any reason, I shall receive a X-thousand dollar exit bonus. Good. It’s a done deal then” !!! I am sure that would go over well! 
Thks. Like I said, no flame, just curious.
People (me too) tend to look at the gross number and think, "good God, that’s more money than I’m likely to see in my entire life…and that’s his annual bonus"?!
What they don’t consider is the ROI that the company got for that $10MM. As a construction manager, it’s likely that you might have some bonus opportunity based on savings against time or $'s. I know you can do the math, but as a matter of reference, if you saved your company a million $'s on a single project, the same .25% bonus would net you $2500. Nothing to sneeze at, but against the million $'s that you put to the bottom line, not a whole lotta luv either.
I understand what you’re saying. Question, if the banks had cash on hand, would they have required the bailout funds?
If the answer is no, then giving $10M for a job well done is stupid. Like I said, he can’t be the only one, so these costs add up to money they don’t have.
PS- I did mention I was in telecom right? this industry while doing decent, hasn’t fully recovered from 2002 yet. So, nope no special bonus for projects well done on this side, nice thought though. This is why i ride an S32 and an old trek Y33, instead of a DA or a B2…
Scott
I think the distinction has to be made between a “grunt” and management.
A “grunt” (and I know you like me using this term for a bloke who got a 10mil bonus) is not responsible for the companies performance. He is responsible for his job. It is industry standard practice in MANY industries to pay people performance based commission. In some industries it’s paid monthly in some it’s paid at year end. If they don’t pay this superstar his bonus, he goes to another company who will.
Management - it is their job to oversee the performance of the company. If the company does well they have done well if the company has done badly, they have done badly. These guys should live and die by the results of the company. If the company doesn’t make money, they should get zero bonus.
Look at it another way, when this guy earns money for the firm, 99.25% of it goes to the companies bank account. 0.25% of it they put into a different bank account called “to be paid as bonus”, earmarked for lucky joe. Forget the figure involved. Is this really wrong? If you sold cars all year and were promised (what do they get? 5%, 10%? And at the end of the year you didn’t get paid your commission what would you do? Firstly you’d quit and secondly you’d sue for breach of contract and you’d win.
Management don’t bring in income so no money should get put into the “to be paid as bonus” account unless the company earns a profit.
Don’t get me wrong $10 million is obscene. But the guy made the company $4 billion. You could argue that no-one should be in a position to make that sort of money because it indicates that he was taking great risks with great sums of money and that’s what got us into this mess… but that’s a bit off topic
…
A “grunt” … is not responsible for the companies performance. …
If they don’t pay this superstar his bonus, he goes to another company who will.
…
The practice that I’m familiar with is that there is a hierarchy of Company performance> Division performance > Personal performance that determines bonuses. In other words if the company makes money then bonuses apply, if not then no amount of personal performance will result in a bonus. This is in part to keep people from taking actions that damage company performance in order to hit their personal targets.
If all the large financial institutions are in the same boat, and especially if the company would have gone broke without government assistance (i.e. no bonus) where is this superstar going to go anyway?
***If the answer is no, then giving $10M for a job well done is stupid. Like I said, he can’t be the only one, so these costs add up to money they don’t have. ***
Let me ask you this… Assuming that he actually made $4 billion for them, do you think another firm might be interested in him? Would someone else be willing to invest in an asset that would provide a return of *40 thousand percent *to the cost of that investment? Anyone that *wouldn’t, *would be an absolute fool. Hell, I’d pay twice that if I had a spare $20 million sitting around. 
Penny wise and pound foolish if they let him get away. *LOTS *of pennies I grant you, but pennies nonetheless, when compared to the return…
Agreed. By contract they should pay him his bonus, he did his job and should be compensated as expect.
As an industry practice (an industry in the dumpster right now) they should not be making these sort of deals, i don’t care how good the sales man/woman is.
As an industry practice (an industry in the dumpster right now) they should not be making these sort of deals, i don’t care how good the sales man/woman is
Let me ask the question one other way.
I want to come work for you and I’m willing to do so on a straight commission basis. If you pay me 10% of my sales and you retain 90% of those sales, would you place a limit on the amount that I could sell?
I would place a limit on your commission, sell as much as you want. The 90% for the company goes to all the things it takes to run the company. Just because I made a bunch of money off you, it would be irresponsible of me to neglect the operational expenses of the company…that’s what we’ve hired you to do, make us money.
You can make the arguement that super sales man Joe would go else where, but if Bank A doesn’t require a bailout because they managed their cash better, wouldn’t all banks catch on after a while?
You do you job you should get paid. That fact that it’s a lot of money should not make a difference.
Under a contract (i assume he is) yes they should pay him, it’s what they agreed to.
It’s still bad business. You wouldn’t tell the roofer who’s doing your house, “if you do a good job, i’ll give you an extra $10k” especially if you don’t have the $10k, or had to barrow money from your big brother to run the house hold.
I know you can do the math, but as a matter of reference, if you saved your company a million $'s on a single project, the same .25% bonus would net you $2500. Nothing to sneeze at, but against the million $'s that you put to the bottom line, not a whole lotta luv either.
Problem I see with your analogy is that we are talking about peoples portfoilios here. When a company is considered to be “Expensive” at a 2% cost, that would mean this guy is sucking up 12.5% of that cost with his bonus alone. For a lower cost fund at 1% this “Bonus” makes up a full 25% of the fund cost.
I’m all for offering “Incentive” but I’m also all for not screwing the client. These guys are getting 10M dollar bonuses while the people they are “Representing” are getting 2% taking out of their portfolio and loosing money too boot.
I’m certain that we could cut out a couple 50K speakers, company parties and conventions and cut “Bonuses” down and probably cut a 2% fund down a bit. So this guy makes 5M and several thousand people get a break on their fund cost.
~Matt