Wall Street firms slashed cash bonuses for New York City employees by 44 percent in 2008, as they reeled from record losses in the securities industry, New York State’s comptroller said in a report issued on Wednesday.
Bonuses fell to $18.4 billion from $32.9 billion in 2007, the largest decline ever and the biggest percentage drop in more than 30 years, Comptroller Thomas DiNapoli said. The size of the bonus pool is the sixth-largest on record, he said.
Losses from traditional broker-dealer operations of New York Stock Exchange member firms topped $35 billion in 2008, more than triple the record set a year earlier, Mr. DiNapoli said.
Bonuses? For what? They didn’t f*** up as much as predicted?
The high-flying execs at Citigroup caved under pressure from President Obama and decided today to abandon plans for a luxurious new $50 million corporate jet from France. The decision came 24 hours after the banking giant, which was rescued by a $45 billion taxpayer lifeline, defended buying the state-of-the-art Dassault Falcon 7-X – one of nine to be flying in U.S. skies – as a smart business deal
"The size of the bonus pool is the sixth-largest on record, he said. "
This makes my head spin. How is there any way to justify this?
Ok, it’s bad and I agree, not sure what bonuses are deserved and by whom. But don’t get too worked up when you hear things like “the sixth largest on record.” Just like when someone says, “In my day, you could see a movie for a nickle.” It’s called inflation, generally as the years pass, absolute numbers go up, movies cost more, bonus pools are larger, etc. The way to look at things is how they compare with regards to inflation.
Not defending Wall Street or the bonuses, just saying, it’s a pet peeve when people throw out today’s numbers comparing them to yesterday’s.
The organization I work for had a record year in 2008 with higher revenues than ever before. The staff all voted to forego year end bonuses in anticipation of a bad 2009. If we can do it so can AIG.
I’m not an idiot. I understand that absolute numbers go up. But, 6th largest pool in history? Had they said tenth I may have been able to handle it, but this just seems impossible to justify.
Didn’t mean to imply you were an idiot, more than anything just saying sometimes it is more “sensational” for the media to report things in absolute terms as it makes the numbers sound bigger.
The organization I work for had a record year in 2008 with higher revenues than ever before. The staff all voted to forego year end bonuses in anticipation of a bad 2009. If we can do it so can AIG.
In my experience that was likely a mistake. Of course, I work for a public company and for us 2008 is over and forgotten about. Don’t make the numbers for 2009? “f–k you. Pay me.” And the dollars you saved from ‘08 by not taking bonuses are already reinvested into the company or your boss’ new swimming pool. In my experience, you take the money when it’s there–especially when your share price is all that matters to the big wigs.
Ok, it’s bad and I agree, not sure what bonuses are deserved and by whom. But don’t get too worked up when you hear things like “the sixth largest on record.”
You are dealing with people who have guaranteed contracts in many cases. Yes, there have been instances where investment banking CEOs have been able to get employees to rip up their agreements and forgo bonuses, but it is unlikely now given the outlook for 2009. Further, a number of firms pay mid-year bonuses and did so with the view this would be a record year, and then the bottom fell out. They don’t have resource into getting those dollars back.
Just a note on bonuses which I think is being overlooked in most of the discussions including this one.
I am not here to defend some of the extreme headline grabbing individual bonuses which have stoked everyone’s ire but to point out that a huge portion of the $18bn do not belong in the same category.
For most people a bonus means just that - a Christmas thankyou for excellent performance in addition to a person’s standard salary. For a lot of people who work in finance on the other hand bonuses are an integral part of compensation. This is partly to allow finance firms to be flexible in how much employees are paid and partly due to other factors like reducing the cost of employee benefits, but the idea that “Wall Street bonuses should be $0 in a bad year” is totally unrealistic. In fact, the trend has been for bonuses to account for an increasing portion of total comp. which, together with the growth of the industry itself, probably accounts for some if not all of the relative size of this year’s bonus pool.
Highly talented and/or educated people with post-graduate degrees and 6 figures of debt wouldn’t start work at 28 in one of the most expensive cities in the world for the 60 - 100k that represents the base salary of a lot of Wall Street jobs without the expectation that that would only represent a portion of their total income. From an economic point of view there would be no point as many other professions earn far more with far less risk.
My real point is just that the word “bonus” is inflammatory. If $10B of the $18B was suddenly called “salary” the situation would be no different but the headlines would be far less arresting.
That’s my point - don’t get hung up on the semantics. For a lot of people who got paid a 5 figure bonus the actual amount was still a huge rebuke with very serious consequences for their personal finances. If that sounds galling I’m sorry but it’s true.
The amount is not the interesting element its the actual net reduction. What is actually going to be fun to watch is that much of the reduction in payments hit folks residing in New York which has a state income tax. If you talk to folks in the state comptrollers office they are now scared shitless as state income tax revenue has decline considerably in the socialistic state of New York. We’ll probably be bailing out the state next.
Been harping on this for years and completely befuddles the mind how the boards of these companies continually pay out massive bonuses to executives that in essence drive the companies into the ground.
There seems to be an executive “Good ol’ boys club”. It’s shocking to see how many executives end up getting a massive bonus, booted from their position because the company is bankrupt and then get hired by another company to do it again.
Seems this country has somehow separated reality from our “upper levels” of everything from sports stars to politicians and everything in between. If you manage to get to the highest levels of something it appears “The rules no longer apply to me”