Obama calls executive bonuses 'shameful'

Friday 30th January, 07:00 AM JST

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jeancolmar at 11:00 AM JST - 31st January

There is an often told joke about the beautiful woman who slinks up to the CEO at a party and says, "Darling, take me; I'll do anything you want." The CEO answers, "Revalue my stock options." Particularly in the US "corporate greed" has reached unrivaled lows of depravity. It is the greed of a few people who have too much wanting more, even if it means wrecking the system that supports them.

One thing that Obama's cry of shame against the CEOs underscores is this: be it good times or bad American CEOs' incomes have nothing to do with their performance. They are immune to the pains we ordinary people suffer when the economy goes belly up. If there is any historical comparison to be made it between them and the pre-revolutionary French aristocracy. The CEOs live in a modern modular version of Versailles where they never see or hear of the social consequences of their greed.
TPOJ at 11:41 AM JST - 31st January

To simply say that earned bonuses should not be paid because the financial institutions received taxpayer money does not look good even on paper--especially when there were no strings attached to the taxpayer money.

That's not even close to what I'm saying. I'd also like to point out that your "no strings attached" point is built on law, not right and wrong.

The context of my comments, which is missing in your assertion, is that these bonuses can not have possibly been "earned" through "performance" if the CEO in question is running a failed company.

If you perform...if the company you run makes money...you receive a bonus. If you don't perform...if the company you run fails so badly the government has to come along and bail you out...you don't receive a bonus.

Why do people insist on obfuscating this screamingly obvious point? I'm not decrying a 50 million dollar bonus for the CEO of a wildly successful company. I am...and sorry to repeat myself, but I want to make sure that nothing extra is read into my point...simply stating that if a bonus is attached to performance, and the company doesn't perform, then you don't get the bonus. That's what "attached to" means.
sailwind at 12:10 PM JST - 31st January

Interesting Background on this between the hyperbole.

Albany, N.Y. -- It's not just stock brokers and the people selling them luxury goods getting whacked by a sharp decline in Wall Street's traditional six-figure bonuses. New York state alone will lose nearly $1 billion in revenue because of the 44% drop, and the economic effects are rippling nationwide. After months of dire predictions, New York Comptroller Thomas DiNapoli put hard numbers to the pain on Wednesday: Wall Street bonuses totaled $18.4 billion in 2008, down from almost $33 billion in 2007.

The drop will hit the state and New York City the hardest, costing the city $275 million in tax revenue, DiNapoli said.

But other states like New Jersey, Connecticut and Massachusetts that have concentrations of financial workers will feel the pinch, too.

"The states that are in the most danger are the ones that are very heavy in personal income tax and very exposed to high earners and have more volatility as a result of that," said Elizabeth Lynam, deputy research director of the Citizens Budget Commission, an independent fiscal and government watchdog group.

http://www.thestreet.com/story/10460689/1/ny-report-wall-street-bonuses-decline-44.html

Two sides to every story, once again.
wuzzademcrat at 12:44 PM JST - 31st January

"Obama calls executive bonuses 'shameful'"

Cuz they get all that money for so little work.

Yet he and his party deliberate a mere 8 hours and declare they intend to spend a trillion dollars of your money and offer unearned bonuses - bribes,essentially - to criminals like ACORN.
LFRAgain at 01:11 PM JST - 31st January

Still going on about ACORC, huh? Guess what, sparky? Authorities found ACORN innocent of wrongdoing. You might want to upgrade your auto-dogma software to reflect that.
maineahrtist at 02:01 AM JST - 1st February

shame...a good old fashioned japanese value!...let's apply it where due....read today's nytimes opinion...article compares 18bill....bonus babies w/?...earned income (or lack thereof)tax credit w/?....their illgotten bonuses.
maineahrtist at 02:04 AM JST - 1st February

right on TPO!....repubs in disarray...how sweet!
airrunwesker at 08:51 AM JST - 1st February

I am with "Sarge"! Why does America reward for bad behavior?
SezWho2 at 04:24 PM JST - 1st February

TPOJ,

Why do people insist on obfuscating this screamingly obvious point?

Perhaps that's because the point is not screamingly obvious. I can see that you are screaming. But that does not improve the merit of the argument.

First, it is not true that if an executive runs a failed company that the executive does not deserve a bonus. You seem to be--to use your own words--taking this as a matter of right or wrong. I think it is a matter of right and wrong only in popular imagination--as in the expression, "That ain't right!".

Whether executives deserve bonuses depends on whether or not they meet the goals on which the bonuses are determined. That their companies are losing money or even failing is not a determinative factor since it may be the executive's performance which prevented the company from having even larger losses or incur an even more disastrous failure. Also important is a given business's position within its industry, the executive's compensation relative to his peers in other industries and the ratio of bonuses to total compensation.

I would agree with you that a good bonus system should take into account the overall prosperity of the company, but that begs the question of whether these were good bonus systems or not. In your paradigm it is absolutely wrong for executives to receive bonuses when the company does poorly so I guess you would say they were not. In my paradigm it would be necessary to craft a bonus system that was reasonably expected to produce good results for the company.

Furthermore, any meaningful discussion of worthiness cannot proceed unless we know exactly what executives we are talking about, what they did to earn the bonuses and whether the bonus programs were soundly constructed or whether they were simply executive flim-flam. It is easy to castigate executives for receiving such pay and it is politically--and demagogically--practical. But that is not a question of right and wrong--that's a question of we like it or we don't.
TPOJ at 11:05 PM JST - 1st February

Whether executives deserve bonuses depends on whether or not they meet the goals on which the bonuses are determined...I would agree with you that a good bonus system should take into account the overall prosperity of the company, but that begs the question of whether these were good bonus systems or not.

Well, that was the context in which I was discussing this. If you remove that context, the meaning changes considerably.

And if they weren't "good" bonus systems, that brings us back to square one: why are we rewarding poor performance?

Furthermore, any meaningful discussion of worthiness cannot proceed unless we know exactly what executives we are talking about, what they did to earn the bonuses and whether the bonus programs were soundly constructed or whether they were simply executive flim-flam.

I don't have specifics, but I don't think it's unreasonable to go by a simple rule of thumb: if your company falters to the point that the government has to bail you out, you have most likely not performed well. At ALL. I suppose it's possible there are bonus programs that say the bonus will be paid even when the company falls apart, but once again, that brings us back to square one.

You seem to be--to use your own words--taking this as a matter of right or wrong. I think it is a matter of right and wrong only in popular imagination--as in the expression, "That ain't right!".

Then this entire debate is worthless.

There's legality, and there's morality. We seem to be using two different ways of looking at this, and therefore are unlikely to come to any useful conclusion. I'm sure there are legal defenses for this...there always are. What's your point? Which are you fighting for, morally right, or technically correct?
PepinGalarga at 12:59 AM JST - 3rd February

I didnt even read the story, or the comments because of lack of time, but let me put my two cents in:

I used to work on Wall Street for one of these companies in the news.

What people don't realize, is that for the great majority of personnel working in these investment banks, the "bonus" is the main source of compensation. Base salary in these shops is usually enough to pay the rent or mortgage (range of 75K-250K even for the highest paid).

The "bonus" in itself is not an extra or superflous compensation. It is a way for the company to or specific trading desks to share the profits that they have had, with their most productive or profitable employees. No two people have a similar bonus amount, and its mostly due to performance. If people don't get paid a bonus, its the same as getting a pay cut of 50-70%.

In many underperforming departments, "your job is your bonus" is the mantra. Most of the losses of these banks came from the Mortgage trading, because they held on to the riskiest pieces of bonds that they underwrote. Other areas, such as derivatives, or currencies, probably had some profits depending what bets where being taken.

Criticizing bonus payments in general is not the way to go here. If you worked in any of these shops, and you helped them generate some profits, you should be able to get paid some share of that compensation. If you happen to work in the departments that got cleaned out, then consider yourself lucky if you can keep your job. thats the story.
Asara at 07:45 AM JST - 3rd February

Why can't their government take back that $18 billion?! It is obvious that wall street was worst financial terrorist that crushed millions of lives around the world. Then they rob another $18 billion for their terrorism. I think Al Kaida is honoring all those CEO's with their own Medal of Honor.
johancohen at 02:23 PM JST - 4th February

what's up with this precocious denounciation of earned monies, tendered or no, money is money, what's exactly wrong with money?
amerijap at 01:38 PM JST - 5th February

Get a clue, dude. CEO is the cream of crops, no matter what time h/she lives. It's so absurd that h/she keeps sucking up the billions of bucks for years. And h/she will get paid $50 million for the retirement? Give me a break!
Blue_Tiger at 10:48 PM JST - 5th February

I think its interesting that Liberals and Democrats are willing to make everyone else pay taxes, but are not willing to pay their own. This comes as no surprise. Obama has preached change, but really this is no different than what we had with President Clinton.