Federal Debt Relief System knows this is the worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won't deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.
From Bloomberg:
Morgan Stanley and Goldman Sachs, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.
Goldman, the biggest and most profitable Wall Street firm until it opted to become a bank holding company last month, has set aside about $6.85 billion for bonuses, or an average of $210,300 for each employee, down 32 percent from $339,400 a year ago. Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person, down 20 percent from last year. Both firms accrue a fixed percentage of their revenue for compensation, so the decline in bonus pools matches the drop in revenue.
Merrill's Compensation
The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people, up from $108,000 a year ago because more than 3,000 jobs have been cut.
The bonus figures are based on estimates that about 60 percent of the compensation and benefits expenses reported by the companies will be paid in year-end bonuses, as occurred in past years. Average bonuses aren't an indication of how much any employee will receive, since payments range widely from assistants to top traders. Bonuses aren't paid until the end of the fiscal year, so firms could choose to reallocate the funds.
``We are in the process of determining appropriate levels of year-end compensation, and no decisions have been made,'' said, a spokesman at Morgan Stanley. A spokesman for Goldman in New York, declined to comment.
``There should be a moratorium on bonuses,'' Barney Frank, chairman of the House Financial Services Committee, told reporters last week. ``If nobody gave them, there wouldn't be a competitive aspect.''
A worldwide economy collapse, caused in part by the financial industry's losses, and a U.S. Treasury plan to spend $250 billion of taxpayer money buying stakes in banks, have made pay a political issue this year.
``I'm just flabbergasted that the financial community has failed to show any sense of leadership on this issue and doesn't seem to understand how angry people are at them,'' said the editor of Corporate Library, a Portland, Maine-based corporate-governance research firm. ``They are just a bonus away from having the villagers come after them with torches.''
Amen to that. I’ll bring the….
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
See Also Bailout, America’s Debt Revolt
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