Bing Blog

Dear Mr. President: About those bonuses...

Wealth

Word comes today that you find the nearly $20 billion Wall Street paid itself in bonuses (boni?) this year excessive and "shameful."  I can see where you might think so, unaccustomed as you are to the needs of moguls, executives, lawyers, bankers, traders and other folk whose lifestyles require an annual infusion of cash to keep them going.

There's so much suffering going on across our nation right now. The maintenance of this form of compensation helps prevent its spread on a much wider scale.

My personal bonus is only a small fraction of that total sum, of course, topping out at no more than several hundred million in this down market. As a consequence I and those like me are tightening our belts and preparing for a long, cold recession. There are those I know on the Street who are right now making plans to eat at home on Friday nights and foregoing the mid-winter vacation to Gstaad.

My friend Armbruster is a case in point. His base salary is only $1.4 million per year. That may sound like a lot, but it's well under a million after taxes. On that, he must:

  • support two ex-wives and their no-good, live-in boyfriends;
  • pay for colleges for his own children and four step-children;
  • maintain mortgages and maintenance fees on residences in New York, Los Angeles, Aspen and (for his aging mother) Cabo san Lucas;
  • purchase and insure six automobiles for himself, wives, children, etc.;
  • treat the extended family to vacations and holiday festivals that are the primary means of keeping members of the extended clan cognizant of each other's existence;
  • have an occasional bit of fun himself.

All without touching his principal, which is invested in financial instruments that, while solid enough, are not bullet-proof in this environment.

Is it any wonder that his face will droop when he sees that his bonus, for which he worked no less hard than last year, has fallen into the mere seven digits? What will his cash flow look like in November?

So please, Mr. President. We in the business community are behind you 100% in your efforts to save our economy with no help from the former party in power. But as you go, please be sensitive to the human cost that you may exact from those who can least afford to bear it.

42 Comments Add Comment

Mr. Bing,

I believe you've forgotten no less than two important issues.
You made no mention of the new jet. So responsible in a day when the reduction of the carbon footprint by fuel efficiency is much in the news. It would be unamerican to expect/do less.

Along similarly enviornmentally correct lines, the home delivery subscription of Lucky Sperm Club must be converted to the online version and I'm sure this involves a serious earnings hit for such extensive restructuring.

That was a good read.

Consume, consume, spend, cars, aspen, me, my friends, gstaad... sure we can (and deserve) treat ourselves to little pleasures, thing gets relative when for me an idea of fun is getting on my bycicle to get to the lake, while others believe this is 'lame' or 'vulgar' to say the least and can only find peace through a private jet, heading to gstaad for a shopping weekend... when did we become so different?

in my infinite quest to do nothing but patrol Bing's blog this week:

saw an article in the times the other day called 'It's The Economy, Girlfriend.' This little nugget of journalistic excellence explored the impact of the current crisis on the wives, girlfriends and mistresses of the aforementioned individuals in Bing's piece. They've formed a support group to help 'cope' with the stresses that come with a diminished cash flow. Please, if you're part of the population already (or on the verge) of losing your job, read this article. You'll realize just how hard folks really have it...................

Funny. As I read your take on the bonus subjet I remember mine still in my wallet. "$25 dollars to any participating restaurant". Cheapskates!

I'm going to put Armbruster in the same category with the unmarried live-at-home daughter of Angela Suleman in Los Angeles. She's the new mother of octuplets who already had six little darlings. She and Armbruster already had quite a lot but they both need more. They need it and we're going to give it to them.

There have been newspaper articles every year expressing similar outrage against Wall Street bonus compensation, more frequent in recent months. So Mr. Obama's public criticism of Wall Street bonuses is nothing new, it's just especially pernicious because he has the audience and influence to stir up knee-jerk class envy that helps advance his party's political agenda: economic "stimulus" in the form of wasteful government spending instead of tax cuts and lower spending on social welfare programs.

I think Wall Street needs to move away from using the word "bonus,” because most people (perhaps rightly) understand the term to mean a "special reward" for unusually good work, or at least "something in addition to what is expected." For Wall Street employees, however, bonus is a regular component of their compensation plan. Most people don't understand that, and are outraged when they hear that even $1 is being paid to Wall Street employees as "bonuses," in the current environment. Those monies could and probably should be described simply as "compensation."

On Wall Street, if the typical annual compensation rate for your position is $200,000, your employer doesn’t give you a $200,000 salary and say you’ll get a bonus on top of that if you do especially well. Your base salary will be more like $80,000. In a great year, you might get a bonus of $120,000-150,000. In a terrible year like 2009, it will be more like $50,000-75,000. And a substantial portion of that will be paid in restricted company stock that doesn’t vest for 3 years. Depending on how senior an employee is, bonus (and the stock portion of that bonus) becomes a very large component of the total compensation plan. In fact, the base salary of the most senior bankers isn't dramatically higher than the salary of new college graduates. And the bonus component is much more volatile for senior bankers, depending to a much greater degree on the overall performance of the firm, the specific group and the employee him/herself as judged by the review of at least 10 junior and senior peers.

That compensation structure would simply be unsustainable in New York City if bonuses were not a regular and expected component of annual compensation. There would be no way that any Wall Street employee could make a responsible decision to purchase property, raise and educate a family, or afford much of anything beyond the rental of a one-bedroom apartment, a modest lifestyle and the maintenance of a professional wardrobe that is reasonably required of bankers and similar executives.

By any reasonable standard, a bonus during a good year on Wall Street is a lot of money – that’s why jobs on Wall Street are highly sought-after and extremely competitive. But in a profession where the typical workweek is 80-100 hours and sometimes more, "you get $0 bonus" translates into "you get paid less than your doorman in the most expensive city in the nation."

The president doesn’t have to feel sorry for Wall Street employees, but using ad hominem rhetoric to advance a political agenda on the basis of class envy and painting “Wall Street” out to be the source of the nation’s problems is lazy and misguided.

Geee Whiz,, Bing, I didn't realize your pal Armbruster had it so tough with all those responsiblities and people counting on him to make a buck.

I was gonna cash in my bottles down at the bottle depot and donate the funds to a local widow woman whose kids need shoes, but I have changed my mind.

How can I get that money to Armbruster.

Can he hold out until the bottles are cashed in or should I send a money order by wire to tide him over until then.

I will tell you, I'm not going to suffer, I'm laying off people, outsourcing overseas and expanding my benefits within the company but I'm not going to let some recession to dent what is mine, I'm not willing to cut my bonus, perks and salary, there are ways, you know,,,,,,,

Shameful, He said: right on ! it's because these sorry ass... took huge risks in order to fetch a bigger and outrageous bonus, that we are in this mess. So, I believe no one responsible enough should take home that kind of bonus. A few people deserve such bonuses, but not the folks on wall st. No way. it's a slap in the face of the American public, like Joe the plumber.
I agree with the bonus incentive, but it must come from hard work, and specially the Creation of real wealth for the Company, and the Community (more taxes) not just shooting for the Moon, and have a hard landing further on.
Why don't you share a bit of the bounty with the rest of us, spending more and more, to the tune of the bonus ? this way you'd be helping the Economy and jobs might be kept or even created.
Thanks for listening.

Yep! You right Mike. What is it? $5k a month for the kids, for the next 20 years or so. Free medical assistance for mom and the babies. Public schools will have another 14 new students, and mom and family will happily sell the story for years to come. Isn't that a wonder?

The rich used to be different than you and me. They drove Cadillac's and flew great distances on airplanes (where they wore a suit).

Then, all of a sudden, we were all rich. We leased luxury imports and walked through airports in our underwear.

Perhaps we are just returning to "the wealthy" and "the rest of us".

I had no comments, until I saw that Sen. Claire McCaskill, D-Missouri, is proposing a new bill. It requires that no employee would be allowed to make more than the president of the United States, if that firm is taking bailout money.

I have not thought this through very far, but it sure sounds great to me. Why not?

After about ten minute's worth of consideration, I cannot come up with one reason why I would object to her bill. I'm going to carry this deliberation a bit further. I will retire to my chambers and render my decision after the weekend.

Senator McCaskill also refers to the Wall Streeters as "idiots", if I read this story correctly. I might have used a harsher term, but we'll leave it there. Perhaps the Senate requires some politeness.

Should we be e-mailing our legislators to cheer this bill forward?

INH - just read that bit on "It's the Economy, Girlfriend". Hilarious, although I doubt that the pampered bimbos involved see it that way.

After working ten hours at a 20% pay cut I am now enjoying my bonus....Siting in my favorite recliner with a sleeping toddler on my chest and my favorite hockey team on the tube and the finest woman on earth gazing at me with eyes that say
It's time for My bonus
LIFE IS STILL GOOD
Have a great weekend

Excellent read! The old Bing that we know and love is back on the block.

Leave the apoplectic episodes of anger to a real professional like me. It feeds my soul, but for you, my friend, I think it's more of a gastric irritant.

These moguls might just have a Dr. Strangelove syndrome where the right arm behaves with a mind of its own, in this case diving and grasping into the cookie jar.

Of course Dr. Strangelove used to pound his bad arm into submission, a response apparently neglected in this case. Publicly identifying their behavior as shameful may be the stimulus package they need. After all, don't they blush easily?

Ya so...I'm sorry everýbody is losing money...that's a shame...I don't know about you, but I feel I will always be broke, ie strapped for cash to pay what I have to pay due to my chosen lifestyle, so friggin' what...so Bing, are you telling me I am suppose to feel sorry for Armbruster?

I don't think so, Mr Mentor...

SE,

If you mean, and I think you do, wink, wink, that your entitlement mentality is as large as any in DC...well

Armbruster apparently has no self-worth. He obviously can't defend against a mogul.

The mogul apparently has the ego of a pharoh who enjoys the free services of slaves.

Pharohs are the receivers of Armbruster's blood, sweat, and tears.

Ahhhhh! to be a pharoh.

No Robbie, Bing is as disgusted by their behavior as any of us. I think Bing is one of those wise heads that knows it's usually better to laugh in cynicism than cry in rage. It helps to turn some of this world's insanity into entertainment.

Bing..some congresswoman suggested that wallstreet execs take the same salary as the president. i will take that deal if the tax payers will pick up my rent food bill travel expenses...oh and i want the six figure book deal advance when it is done

In all reality, it is quite shameful what we have increasingly gained our life pleasures from: fast cars, exclusive vacations, and high priced luxuries.

Is it all necessary? I think not. The question in my mind, is when did such a majority of American business leader's mindsets change from philanthropy to a bubble-like life of their own.

"Riches do not consist in the possession of treasures, but in the use made of them." Napoleon Bonaparte

SE. You refer to what I'll call 'fully loaded cost' NOT compensation. from a macro view, how can an industry which sucked so much value out of the entire economy substantiate a bonus structure equal to $18 billion. it seems like no matter what the performance is, wall streeters are garnering massive payouts per employee.

you may be right in your assesment of the Obama administration's agenda however it's hard to disagree when at face value, it seems like the middle and lower class are taking the brunt of the crisis while the streeters making a mere $80k seem to be doing just fine.

The crooks can all rot in hell.

Listen Stan--your pal Armbruster needs an investment vehicle that makes sense. Tell him about Bernie Madoff's new MIDAS find. I read that you're in it, and just read that Jamie Dimon is an investor too!.. Armbruster can take $100k of his $1.4mil salary and watch it grow by 20% a year. You already told everyone they can get the info at www.bernard-madoff-scam.blogspot.com, but this is just a reminder!

The president doesn’t have to feel sorry for Wall Street employees, but using ad hominem rhetoric to advance a political agenda on the basis of class envy and painting “Wall Street” out to be the source of the nation’s problems is lazy and misguided.

Posted By SE, New York, NY

Dear SE
I have corrected your last paragraph...to give it a proper context..

The president doesn’t have to feel sorry for Wall Street employees, AND using ad hominem rhetoric to advance a political agenda on the basis of class envy and painting “Wall Street” out to be the source of the nation’s problems is POLITICALLY ASTUTE.

As you can see there are always two sides to a coin.

I like bonuses myself...just don't belive that having a title or a position in a company automatically
entitles one to a SIZABLE bonus..

"Bonus is merit pay" poor performance does not "MERIT" a bonus.

There are good wall street people and there are bad wall street people,,,but the mood of the country is...let's Tar and Feather the whole bunch...just to make sure none get away....

Not fair you say...maybe not.. but who gives a dam...Hey..there goes one of them fellows ....get im boy's...

While we have no rules or regulations, lets redistribute the wealth, because we can. Isn't that the republican way? If it is not specifically prohibited, them it is legal. Prosecute the 400 wealthiest families for fraud, or whatever, and make them pay for their ill gotten gains or toss them in jail.

The money is out there, its the distribution that is the problem. Come on people, we were robbed! Lets hunt them down, we are not stupid.

@Mike
"It helps to turn some of this world’s insanity into entertainment"

This particular trait of americans to use adversity as a source of entertainment is something we in india admire !

Moguls behave just like ancient pharaohs: In ancient times pharaohs had pyramids built in their honor and were showered with diamonds, gold, jewelry, and countless wives.

Today, moguls have skyscrapers, hospital, and ships named in their honor.

Their toys and ornaments vary from yachts, mansions, and private jets to rolex watches and jewelry.

They are supposed to be highly intelligent people as depicted by their choice of status symbols; but, they're behavior may be called criminal as todays expose' and revelations and perp walks make their secret lives public.

The more things change; it seems the more they stay the same.

Bing, I haven't a clue why you deleted my reply to Kamesh. It wasn't derogatory or disrespectful in any way, shape or form.

Sorry, Mike. Hit the wrong button.

People are bad liars.

On one hand, they say "money is the root of all evil" and "money corrupts people". On the other hand they say "Why does he/she make so much? If I had that money, I could/would do so much more good with it".

If money is such a problem/burden/curse, then why do people get upset how much others make or spend? I will tell you why. People want the money, fame and power. They just lie to themselves and says it doesn't matter because they do not have it. If they had it, they would fall victim to the same trappings that other rich people fall victim to.

Stop lying to yourselves about money. Money is highly important and matters just as much as love, peace, health, intellect, and happiness. It is a key ingredient in the making of a good life.

Now stop talking crazy and try to get as much money as you can!!!

Patrick,

Cogent analysis. We now sell all sorts of things to wannabes. We do this under the umbrella of the ubiquitous "aspiration brand", where there is always more "ass" than perspiration.

I liked it better when the rich drove Buicks and were less conspicuous, but that, like everyting else posted on this blog is purely a metter of personal taste.

The late oil baron H.L.Hunt reportedly quipped, "If you know what your worth, you ain't worth much." that pretty much says it all.

Some people.

Some people like SE think that they deserve a lot of money because they put in 80 to 100 hours per week shuffling paper and call it "work", when actually the doorman at their place of residence in the most expensive city in America contributes more real value to the economy.

Some people like Yadgyu misquote parables and the misquotes are telling: the LOVE of money is the root of all evil, not money itself. Sure, money is necessary; but only someone who is evil worships the accumulation of money by any means (see Madoff, Bernie).

Bob makes an interesting point. This stuff has been going on forever. The mad little people were poor and the Pharaoh was rich. But they probably complained anyway. Here we are centuries later, and I bet we can't change things either.

While I try to always keep a song in my heart, right now I have a song stuck in my head, a verse of which goes:

Money can't buy back your youth when you're old;
Or a friend when you're lonely, or a love that's grown cold;
The wealthiest person is a pauper at times,
Compared to a man with a satisfied mind."

by Red Hayes and Jack Rhodes.

Mike, yes my post Friday night was infused with my own special brand of Bourbon logic...I was just suprised that Armbruster is now Bing's friend...in the Machiavelli book, under "Doing vs Getting" section, Bing wanted to kick his ass...maybe he still does, little things like that should't ruin a friendship...

I was just being silly...

If I weren't friends with people who's ass needed kicking, I would be forced to have lunch by myself every day.

Yes, from the grandest elephant to the humblest worker bee...we all got an ass-kicking in our future..."Gotta Serve Somebody"

Thanks everybody, great conversation...

Thanks Bing, normally you only delete my posts if they're over the top on nastiness...and I can often predict those. I thought maybe I had achieved a true zen state of foul temper even I didn't recognize (something to strive for but probably won't fully attain until my mid-eighties).

My comment to Kamesh was:

Thank you, and a particular trait of your culture I admire is its reverence for education.

Way to go MR PRESIDENT

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