Bonuses

You know what rankles me? The financial houses just don’t get it.

Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year.

Actually, they do get it. Until we change the rules – they can do exactly what they’re doing. There is no morality or decency – there is only “take what you can, when you can.” So, even as the companies go under – supported briefly by a surge of taxpayer largesse – greedy individuals continue to write themselves checks for double and triple their annual salaries.

Mr. DiNapoli said the average Wall Street bonus declined 36.7 percent, to $112,000. That is smaller than the overall 44 percent decline because the money was spread among a smaller pool following thousands of job losses.

Every argument that I’ve heard in favor of these practices focuses on the letters and specifics of the contracts and rules. It almost reminds me of those idiots in online games who make a career out of exploiting glitches and bugs in the games. “It’s a legitimate strategy,” they cry, as they ruin the game for everyone.

Here’s the thing – individuals are making these choices. Individuals talk it over and decide to declare bankruptcy; ask for a government bailout; or go ahead with bonuses. We were willing to roll with it as long as we all got flatscreen TVs. Now that we see that it was all a lie – we want them to be a bit more circumspect. I understand that for these managers it’s not unreasonable to take the last couple of $mil on the way out the door. I mean, otherwise someone else would get it – right?

I’ve thought a lot about incentive plans recently. My company has written a couple of them. We’ve had long conversations about why you have such a plan at all. Here’s the thing: You don’t want to give bonuses for working long hours, for traveling a lot, or more generally – bonuses for suffering. As a business, you use incentives to motivate certain behaviors that are in the best interests of the company. The core axiom ought to be “incentives are linked to making us profitable.” That’s the corporate side, as an individual, I want to be rewarded for doing things within my control, and at which I succeed.

More generally: Salary is for behavior. Bonus is for results.

The financial houses have utterly failed on the “results” side. Unfettered greed, short sighted planning, and outright lies have put the nation in a massive economic slump. Real people, lots of them, are losing real and tangible quality of life because of these idiots. Management from the lowest to the top has put their company and the nation in this awful position.

To write themselves bonuses under these circumstances isn’t criminal, and it’s probably impossible to stop them by either legislation or regulation. We’ve made banking the best paid industry – so our very smartest people go there. We’re not going to outsmart them or out-play the players.

We can, however, be irate and shame them in public. I want these people raked over the coals on CSPAN. It’s quite likely the only satisfaction I’ll ever get on this one.