http://opinion.latimes.com/opinionla/2008/09/lehman-goldman.html
Bankrupt Bankers and billion-dollar bonuses
Great news! Just when it seems like all the tidings about the economy are terrible -- the United States financial system is buckling under $700 billion of bad debt, regular people are losing their homes, their jobs and their pensions -- comes reassurance from Wall Street. It turns out that the head honchos at Lehman Brothers, which filed bankruptcy last week, will still be getting their share of the $2.5 billion set aside for staff bonuses.
Barclay's of London, which is buying Lehman Brothers for $1.75 billion, confirmed the news to The Independent. The pool gets divvied up between 10,000 people.
I wonder if that includes the $188 million the company agreed to pay to CEO Richard Fuld a couple of years ago? Maybe not. There seems to be tussle over the $34 million he earned last year. (All told, the Age reported, Lehman's top 5 execs took home $81 million in 2007.)
I know what you're thinking: If the compensation for failure is $2.5 billion, how much is success worth? Oh, wait -- that's not it. You want Barclay's to give those execs a financial haircut! Now, if Lehman had been bailed out by Washington, the bonuses would seem a bit more tenuous. But wait -- a contract is a contract, isn't it? If Lehman employees met the contractural requirements for a bonus, shouldn't they receive it, regardless of the overall company's travails?
ALSO see:
http://www.google.com/hostednews/afp/article/ALeqM5ihZsfjNmSmIZlAItBU9yui3qzVew
Wall Street set to award record pay: report
(AFP) – 2 days ago
WASHINGTON — US banks and securities firms could pay a record 140 billion dollars to its staff this year, a rebound in compensations that comes despite regulatory scrutiny of Wall Street pay culture, a report said Wednesday.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did at the peak year of 2007, according to an analysis by the Wall Street Journal.
It studied securities filings for the first half of 2009 and revenue estimates through year-end.
Total compensation and benefits at publicly traded firms that the Journal analyzed were on track to increase 20 percent from last year's 117 billion dollars, and to top 2007's 130 billion dollar payout.
This year, employees at the companies will earn an estimated 143,400 dollars on average, up almost 2,000 dollars from 2007 levels, it said.
The report came as companies began declaring their third quarter earnings, with financial firms expected to perform well and revenue moving to levels seen before the financial crisis sparked off by a home mortgage meltdown.
JPMorgan Chase reported Wednesday its third quarter profit jumped to 3.6 billion dollars in a further sign of the rebounding fortunes of the banking sector.
The profit however was heavily skewed to investment banking and trading results, which offset weakness in the consumer sector, especially in credit cards.
The group, among the healthiest of the major US banks, said earnings were multiplied nearly by seven from 527 million dollars in the same period a year ago.
Financial firms have been boosted by a stronger stock market, thawing credit market, a resurgence in deal making and the continuing effects of various government aid programs, even though the economy remains sluggish and unemployment is near double digit levels.
The rebound also reflected growing confidence by some Wall Street firms that they can again pay top dollar for top talent, especially once they have repaid the taxpayer-funded capital infusions they received at the height of the crisis, the Journal said.
So far, regulators and lawmakers have focused on making sure pay practices discouraged excessive risk-taking.
The Journal's analysis included JP Morgan and other banking giants such as Bank of America and Citigroup, securities firms like Goldman Sachs and Morgan Stanley and asset managers such as BlackRock and Franklin Resources.
The total revenues of the firms studied were projected to hit 437 billion dollars, surpassing 2007's 345 billion dollars, according to the analysis.
