A few months ago, I offered my services — only half facetiously — to British Petroleum as CEO after I had read about and watched bits of Tony Hayward’s testimony before Congress. He’d acted like the Sergeant Schultz character (I know nothing, nothing!) on the old sitcom Hogan’s Heroes; I figured I could do at least as good a job as Hayward for a lot less money. Win-win all the way around for everyone!
The Sergeant Schultz defense seems to be fairly common among CEOs and upper management for many companies, even though they are paid to be aware of what is going on. I would imagine that there are many of us among the millions of long term un and underemployed who could do the jobs of CEOs and so-called Masters of the Universe and be not only more honest in our dealings with others but also more empathetic for those who are struggling.
Instead, we get to see Goldman Sachs CEO Lloyd Blankfein’s salary and other compensation jump again in 2010:
The firm’s board granted restricted stock valued at $12.6 million to Mr. Blankfein and other senior executives, including Gary D. Cohn, the firm’s president. The board also approved a new annual base salary of $2 million for its chief executive, up from $600,000. Mr. Cohn and others will see their base salaries increase to $1.85 million, according to the filing on Friday.
With his previous salary of $600,000, Mr. Blankfein’s 2010 compensation comes to $13.2 million. Senior executives often receive part of their compensation in cash, but Goldman did not release details on this component of Mr. Blankfein’s compensation.
Surprisingly, this does not sit well with all corners of the business world. This is from a Fortune Mag (via CNN blog):
How might you compensate management for a year in which profits plunged, you spent $550 million of shareholder money to settle a fraud investigation and your stock ended up more or less exactly where it started (see chart, right)?
You might be tempted to nix raises or withhold bonuses to send a responsible message about linking pay to performance. But if so, you wouldn’t be Goldman Sachs (GS).
It just had the year described above – and responded by tripling everyone’s base salary while boosting bonuses by 40%. Is this a great country or what?
Turns out, Bank of America is doing similar and is also not winning fans for doing so (via Wall Street Journal):
Bank of America Corp. intends to give some investment bankers a greater share of their bonuses in cash, the latest Wall Street compensation move roiling banking chieftains as they meet in Davos, Switzerland.
Last year the highest-paid bankers at the nation’s largest bank by assets received as little as 5% of their payout in cash. Now bankers and traders making more than $5 million are getting as much as 30% of their 2010 compensation in cash and at least 70% in deferred stock, according to people familiar with the situation. Some could see a stock award of as much as 80% and 20% in cash.
Of course, the bankers love to send mixed messages. On Wednesday (January 26), the NY Times DealBook had this from the World Economic Forum’s meetings:
DAVOS, Switzerland — After being on the defensive for the last two years, there were signs that bankers attending the World Economic Forum here were pushing back more assertively against attempts by regulators to cramp their style.
At one of the opening panels on Wednesday, top executives from Goldman Sachs and Standard Chartered warned that new restrictions on their businesses are either irrelevant or threaten to hurt economic growth.
Then yesterday (January 29), Reuters offered this walk back:
(Reuters) – Top bankers adopted a softer tone after high-level meetings at the World Economic Forum on Saturday, thanking governments for shoring up the financial system in the hope of avoiding tighter regulation.
But, in a reminder of the problems banks still face after absorbing billions of dollars of taxpayers’ money in bailouts, French Finance Minister Christine Lagarde said financiers needed to show real thanks by changing their behavior.
According to Carol Graham of Brookings, author of “The Paradox of Happy Peasants and Miserable Millionaires,” there is no shortage of what she calls “frustrated achievers.” Stewart Wallis of the New Economics Foundation in Britain, said that the key to well-being is not just wealth but “flourishing and feeling valued.”
Jeffrey Sachs of Columbia University said America’s economic system had corrupted the soul of the country by engineering excess: over-eating, excessive television-watching and material consumption now dominated the lives of millions of Americans. “We designed a kind of society that is designed for addiction,” he said.
A few months ago, there was a study published about money buying happiness but only up to a point.
With every doubling of income, people tended to say they were more and more satisfied with their lives on a 10-point scale – a pattern that continued for household incomes well above $120,000.
But when well-being was determined by asking a series of questions about the previous day – whether people had experienced a lot of enjoyment, laughter, smiling, anger, stress, worry – income mattered only up to about $75,000. After that, more money didn’t seem to buy more – or less – happiness.
Seems to me the best way for everybody to be happy is for the bankers to relinquish their multi-million dollar bonuses, help provide jobs to all us millions of long term un and underemployed and cap all wages at or near $75,000 per year. Then the bankers can stop whining about how no one loves them and we can all have our Rodney King moment.
No, I’m not going to hold my breath on this happening either.
And because I can:
Cross posted from Just a Small Town Country Boy