Dear Mr. President: About those bonuses...
Friday, Jan. 30, 2009 at 9:56am
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.