Posts filed under “Wages & Income”

Overpaid Execs Over-Emphasized Comp

Here are the key data points:

• The average CASH payout for the top 25 execs at the 5 companies that were bailed out by Uncle Sam — AIG, Chrysler, GM, GMAC and Chrysler Credit — has been cut in half since 2008 to $469,777.

• For the top earners at those companies, pay is expected to fall by 11% to $1.62 million.• Total compensation is down nearly 77% from 2008.

• More than 70% of all approved compensation is expected to be given in the form of stock instead of cash this year.

Oh well, that’s what happens when you run your firm into the ground.

Here’s your NYT excerpt:

“For months, Wall Street banks and the troubled automakers feverishly protested that their top executives would flee if they were not lavishly rewarded for their talents. New data, however, suggests the departures were more of a trickle than a flood.

Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data.

The relative stability, at least within the executive suite, suggests that a soft job market, corporate loyalty and personal pride helped deter the feared management exodus at the companies hardest hit by the pay rules.”

Gee, complaining execs turn out to be full of crap — who could have ever seen that coming?

One last note: None of this data includes comp from Bank of America/Merrill Lynch, Citi, Goldman Sachs, Fannie/Freddie, JP Morgan/Bear Stearns, Morgan Stanley or Wells Fargo . . .

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Source:
Few Fled Companies Constrained by Pay Limits
ERIC DASH
NYT, March 22, 2010
http://www.nytimes.com/2010/03/23/business/23pay.html

Category: Bailouts, Wages & Income

Taibbi: “The Best 18 Months of Grifting This Country Has Ever Seen”

I have a few quotes in Matt Taibbi’s no holds barred look at Wall Street’s profits and bonus culture. It is classic Taibbi, full of righteous indignation and fury over the bailed out banks quick transformation from near bankruptcy to record profits. He details 7 scams the various TARP recipients have pulled. Here’s a taste…Read More

Category: Bailouts, Corporate Management, Wages & Income

Banking Compensation Around the World

This chart, from a Reuters’ analysis of pay at the 18 biggest banks by market value, illustrates the massive differences in pay among the CEOs of the world’s top banks. The compensation of the CEOs of the largest U.S. banks towers above what’s paid to banking chiefs in other parts of the world. > Source:…Read More

Category: Corporate Management, Wages & Income

American Idol, Goldman Sachs Edition

Ever wonder why Goldman execs don’t speak to mere mortals? The answer was hidden in a tongue-in-cheek Michael Lewis Bloomberg column, which he slipped this by everyone late night Friday. Its an internal memo to Lloyd Bankfein, chock full of suggestions to improve GS’ public image. This one was my favorite: Each year, for example,…Read More

Category: Corporate Management, Humor, Wages & Income

Hours of Labor Needed to Buy SPX, CRB, Gold

I find these 3 charts, courtesy of Ron Griess of The Chart Store, fascinating. They contextualize market gains, dollar weakness and inflation and deflation relative to various markets: click for larger charts S&P500 Commodities Gold

Category: Commodities, Inflation, Investing, Wages & Income

Wages of Failure: Exec Comp at Bear, Lehman 2000-08

I stumbled across a fascinating pierce of research (via a reader) regarding misaligned pay incentives Bear Stearns and Lehman Brothers: “The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives of these firms was largely wiped out along with their firms. In the ongoing debate…Read More

Category: Bailout Nation, Bailouts, Corporate Management, Wages & Income

A Long Look at Banker Compensation

Today’s NYT magazine has a long, well done interesting piece on Kenneth Feinberg, the government’s special master for executive compensation, titled What’s a Bailed-Out Banker Really Worth?. Anytime I read a discussion on compensation, bonuses, and bailouts, I am astonished as to how much of the general discontent over these issues traces back to the…Read More

Category: Bailouts, Corporate Management, Wages & Income

Elizabeth Warren: The Coming Collapse of the Middle Class:

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America’s credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

2007:

The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net – UCTV – University of California Television.

Category: Economy, Employment, Video, Wages & Income

The Vilification of Goldman Sachs’ Pay Practices

Mike Santoli has an interesting perspective on the furious reactions to Goldie’s bonuses in this week’s Barron’s: “Absent in the rage against people earning impressive pay after their firms got public help is the key question: Do we want the firms that received aid to continue operating as autonomous, profit-seeking businesses, or as quasi-utilities operating…Read More

Category: Bailouts, Corporate Management, Wages & Income

Much Ado About Nothing $23B: Goldman Sachs Bonus

Its time for the quarterly hand-wringing amongst the populace regarding the over-sized bonuses at Goldman Sachs. This Q, its a mere $23B.

The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector — but bonuses are not one of them. [BR: Or, at least not the most important thing to be enraged over]

We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is.  You can complain about it, but it is all but pointless. Feel free to pursue a millionaire’s tax of 1% (or 10%) on everyone who earns more than $1m — a super top tier — to pay for health care reform or whatever you want. (Best of luck with that!)

Every few years, we lament overpaid athletes, musicians, movie stars. Bruce Springsteen is going to make $100 million+ this year on tour. While you can complain about it, ask yourself how many people can fill 50,000 seat arenas 200 night a year at $100 a pop. Lebron James, Peyton Manning, and others justify their salaries by generating massive revenue and profits for their employers.

So too it is with Goldman Sachs and others.

The traders who throw off the most profits, the bankers that generate the most lucrative deals are worth tens of millions to their “team owners.” That is how it is, and it is unlikely to ever change.

What should you be upset about?

• Paying people in year one for risks that last years or decades;

• The “privatized gains, socialized losses” of the current system;

• Dramatically reduced competition in the Banking sector;

• The idea that “Too Big To Fail” is now an official policy of the United States;

• The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;

• Bank lobbyists preventing any sort of credible regulation from passing;

• Goldman Sachs wresting $19 billion from AIG;

• The absurd and poorly thought out $750 billion TARP plan;

• The suspension of mark-to-market allowing banks to hide losses and not accurately disclose their bad assets;

• The outsized influence Banks have on Congress and Goldman Sachs has within the Executive branch.

There are plenty of things to be upset about these days. Top performers earning huge paydays at the biggest firms is not one of them . . .

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Previously:
Looking at Wall Street Pay (August 1st, 2009)

http://www.ritholtz.com/blog/2009/08/looking-at-wall-street-pay/

Why Financial Reform Died: “Banks Run Congress” (October 12th, 2009)

http://www.ritholtz.com/blog/2009/10/why-financial-reform-died-banks-run-congress/

What’s Wrong With Billionaire Fund Managers? (April 16th, 2008)

http://www.ritholtz.com/blog/2008/04/whats-wrong-with-billionaire-fund-managers/

Read More

Category: Bailouts, Wages & Income