Wall Street Nears the Bonus Round
Despite massive failures, year-end rewards still on the table.
As if taxpayers didn't have enough to gripe about, Wall Street bonus season is fast approaching. It appears executives will still be compensated after a government bailout and a dismal 2008.
Although how much -- and how it will compare to last year's windfall -- has yet to be determined, most financial analysts agree that paychecks will indeed be a little heftier during the holiday season.
But wait! There's more! According to a survey of 1300 financial services professionals conducted by eFinancialCareers.com, 36% expect a higher bonus than last year. Experts concede that the compensation wouldn't be nearly so high had the $700 billion rescue package been shot down.
So much for not rewarding poor performance.
Given the public outcry over the bailout, Congress finds itself in the unenviable position of having to keep a close watch on the expenditures of those companies and industries it chose to shore up. American International Group's (AIG) spa weekend, for example, is something they'd rather not have happen again - especially if they want to be reelected.
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This week, New York Attorney General Andrew Cuomo sent a letter to 9 of the financial institutions participating in the bailout package. In it, he demands to know the specific bonus amounts that will be doled out to top brass at the end of the year, even though this information isn't usually made official until the end of November. He also reminds executives that compensation exceeding the amount of work provided could
violate New York state law, although a legal precedent might prove difficult to obtain.
Henry Waxman, Democratic chairman of the House Committee on Oversight, sent a similar letter this week urging banks to forego annual bonuses in December.
Whether the letters were thrown out, recycled or shredded has yet to be determined.
Defenders of the year-end bonuses claim that allocating extra cash prevents the loss of top talent to greener pastures. Some also point out that, while the bailout package limits CEO salaries, there's nothing restricting the payment of regular employees.
Three firms -- Morgan Stanley (MS), Merrill Lynch (MER) and Goldman Sachs (GS) -- will likely lead the pack in the distribution of bonues, having already set aside a combined $20 billion.
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