First off, in case any of you were unaware, our stance regarding "say on pay" is that no CEO should ever allow him or herself to be roped into such a demeaning situation. You might as well work on commission. We don't even think anyone should entertain a discussion on the matter. The board either believes in you 100 percent or not at all. Unfortunately, sometimes the snakes known as your shareholders trick you into walking into the room under the guise of bagels and lox, and them bam! they surround you, and start demanding your compensation be tied to performance. This happened to Goldman Sachs CEO Lloyd Blankfein yesterday. He handled it all wrong.
Blankfein told shareholders pushing for a "lid on excessive pay" at GS's annual meeting that he was very concerned about the company adopting the proposal, as it would “create a feedback loop. It would create a cloud, a constraint, a limitation on decisions that have been at the heart of what a board has done." The whole thing was said to be very impassioned and that at several moments, one could detect a slight cracking in Blankfein's voice. Huge mistake. Obviously Blankfein, who was paid $70 million last year would like to keep himself in the lifestyle he's become accustomed to. But as the CEO on Wall Street who's fucked up the least in recent memory, he should be playing it cool. He should've walked in there and said "I am Lloyd fucking Blankfein. There will be no say on my pay. In fact, bitches, just because you have offended me, I want my 2008 bonus package to be determined today. $100 million. That's right, a unit, baby." Then dropped the mic and walked off. And you know what? They would've said okay. You want say on pay, I have two words for you, people: Jimmy Cayne. I hear he's looking for work, and will agree to just about anything.
Goldman Chief Says ‘Say on Pay’ Would Be Damaging [DealBook]
Posted by guest , Apr 11, 2008 1:38PM
Fantastic Bess. (From a dude who likes working on commission.)
Posted by guest , Apr 11, 2008 1:46PM
I know Random Banker will once again pop up and claim Blankfein's case was one of 'dumb luck' (ignoring the fact that this guy rose through the ranks of Goldman - where tens of thousands of very bright and ambitious people have ended up over the decades).
However, Blankfein went up from being a lowly postal worker's sone to where he is today. If anything, he deserves more. Fuck the losing haters - shareholders here being primarily loser unionists who try to compensate for their own pathetic-nes by forming a mob and then shaking people down.
Posted by guest , Apr 11, 2008 1:47PM
Blankfein didn't need to go all sissy. He should have EXACTLY said what Bess just did. Bess for CEO Goldman.
Posted by ab , Apr 11, 2008 1:58PM
@1:46
Not to say that in this case it's all luck, but your argument is retarded.
Say you take your "tens of thousands" of people and randomly assign P/L each year. Given the size of the pool, after a couple decades you're still bound to end up with at least a few people who consistently outperformed each year. Blankfein could just be the lucky one here.
Posted by guest , Apr 11, 2008 1:59PM
A raise? Does anyone seriously believe that *anyone* is worth that amount of money. Let alone that the stock price IS DOWN. Yes, compared to the idiot Thain he seems like an underpaid genius. I just love it when Thain's base salary is listed as $57,000. Someone must have thought that was very funny. I bet if GS put a want ad for a new CEO for *only* $1 million, they'd do just fine. Warren Buffet can seem to find plenty of honest and effectives CEOs willing to work for $200,000. Wall Street apparently is not as bright. I guess that's why Warrn *earns* his money, while Wall Street execs *steal* their salaries...from stockholders no less. Of course, since institutional investors ARE IN BED with IBs, NOTHING IS GOING TO CHANGE ANYTIME SOON. At least not until the entire system collapses. Which is what's beginning to happen. I bet BSC could've used some of their former CEO's pay to prop themselves up.
Posted by HAM05 , Apr 11, 2008 2:02PM
oh snap bess. instead of watching that scene in remember the titans im now going to read this piece to the team before games
Posted by guest , Apr 11, 2008 2:04PM
@1:58 understands probability and has read Fooled by Randomness. Congratulations!!
Posted by guest , Apr 11, 2008 2:06PM
If Mr. B was paid $50 million rather than $70 do you think he would walk? Doubt it. So how did the comp committee decide on that number?
Posted by guest , Apr 11, 2008 2:10PM
@ 1:58. I am fed up with this if you take 10,000 people put them in a box one of them, by pure luck, will end up being Warren Buffett, therefore Warren Buffett is probably as smart as a chimpanzee argument. Sure, that may be possible. Particularly if we all sat around flipping coins for every decision we make. Yet, Warren Buffet, Lloyd Blankfein, etc. are incredibly wise, experienced, talented business decision makers. Maybe your model is too simple. Maybe all of us are competing and the best win. I don't know, maybe. Speak for yourself, but my success, pale as it is in comparison to Buffet, et al, is not due to luck.
He should be paid as much as he can possibly get out of his board's comp committee.
Posted by guest , Apr 11, 2008 2:10PM
actually, in the old days cutting the pay at the top by that amount would have caused the top guy's salary to bump into that of those below him. Not the case anymore, where the multiples are astounding at the top levels. So again my question: why can't the comp committee just give him $20 million less, which would leave that much more for the shareholders.
Posted by ab , Apr 11, 2008 2:16PM
like i said, not necessarily luck. just that the fact that he has done well in a place with tens of thousands of others doesn't prove that it isn't luck.
and i've got no problem with him wanting to get paid as much as he can - who wouldn't. but i've also got no problem with the shareholders wanting to tie his pay to performance. both sides want to protect their own ass.
Posted by NomadTrader , Apr 11, 2008 2:20PM
Oh Bess, if only somebody would have the nuts to do it. The more the merrier. Go for it L. Frickin B.
Posted by guest , Apr 11, 2008 2:20PM
"fooled by randomness" is the last refuge of the weak and the incapable
Posted by guest , Apr 11, 2008 2:24PM
@2:16 The comp commitee in theory represents the interests of the shareholders. Problem is that the shareholders are starting to believe that the committee is instead a rubber stamp for managements interests. Some truth to that. Def needs fixing, but I doubt the solution is to have the firm's executive pay set by referendum.
Posted by guest , Apr 11, 2008 2:50PM
@2:20 - funny, I thought investment banking was the last refuge of the weak and incapable.
Posted by guest , Apr 11, 2008 3:08PM
Cynthia McKinney for President!!
Posted by mrpink , Apr 11, 2008 3:08PM
Bess for GS CEO.. Yes!
-mrp
Posted by mrpink , Apr 11, 2008 3:09PM
I meant to add.... That was very Sachy, Bess.... Just Sachy.
-mrp
Posted by guest , Apr 11, 2008 3:16PM
Pink - What's "sachy"?
Posted by guest , Apr 11, 2008 3:22PM
Should Oprah be making $100mil/ yr? Should Tiger Woods be making what he is making? Should anyone in the NBA be making what they are getting paid?
Oprah gets paid by doing her show and selling ads which are paid for by corporations with shareholder monies. Tiger Woods gets corporate endorsements and golf prizes that are paid for by corporations using shareholder monies. NBA player salaries are where they are because of corporate expenditures.
If we are going to claim corporate monies are being wasted on overcompensating some, we should make sure corporate monies are not being wasted on overcompensating others. After Blankfein, lets go after what Oprah is getting paid, after Oprah, lets rein in the compensation paid to Celine Dion!
Let the market decide what pay scale is appropriate. What we don't need is a bunch of idiots going off on some populist rant in the name of shareholder salvation.
Posted by mrpink , Apr 11, 2008 3:23PM
@ 3:16:
Refer to:
http://dealbreaker.com/2008/04/goldman_sachs_masters_of_henry.php
an excerpt here:
Sachy (adj):
1. Delicious, entirely superior, beyond reproach.
2. Without peer (especially in the context of total superiority)
3. Omnipotent
Ex: The way Freddy executed that trade then fade after disseminating false information about a potential takeover of Luby's was positively sachy.
Etm. From the modern, Goldman Sachs (superior financial institution)
Syn: Superior, Unique, Peerless, Orgasmic
Ant: Thinkequityesque
Posted by guest , Apr 11, 2008 3:26PM
The whole idea of Blankfein in front of GS shareholders passionately defending executive pay while simultaneously laying off part of his workforce to save money because of recent GS setbacks is a little surreal.
It's too bad Peter Sellars is dead. We need a film satire on Wall Street along the lines of "Dr. Strangelove" and Sellars would have done a great job playing Blankfein.
Posted by guest , Apr 11, 2008 3:33PM
@2:50 isnt it usually bankers who quote to you from fooled by randomness to discuss the results of successful traders? i sure don't know any actual traders who do so.
Posted by guest , Apr 11, 2008 3:35PM
@3:23 what bothers me is that she clearly relied on Timmay for the "trade then fade" example.
Posted by guest , Apr 11, 2008 3:38PM
@3:35 what are you talking about?
Posted by guest , Apr 11, 2008 3:38PM
Dead wood has to be cut loose. Fire the losers, anyone with a bonus under 410 mill should be sent home - except the chick with nice hooters over there
Posted by guest , Apr 11, 2008 3:56PM
If you're willing to rake in the fat eight figure bonus when the company is doing well, you should have to suck it up when the company is doing like shit.
Except this is Wall Street, where we privatize the gains and socialize the losses.
Posted by guest , Apr 11, 2008 3:59PM
what do you mean by "suck it up"? Pay back the bonus? There's actually a trend towards that, with a greater percentage of the bonus being paid in restricted stock. If time goes by and the company doesn't succeed that stock will become worthless.
Posted by guest , Apr 11, 2008 4:02PM
okay everyone please stop saying "privative the gains and socialize the losses" please.
it is neither original nor pithy and does not make you sound smart.
Posted by guest , Apr 11, 2008 4:05PM
If only there were a way to see the performance of GS with Blankfein versus their performance without Blankfein, would we be able to see the REAL value add...and then give him a % of that. It would be like a trader's comp package, he eats what he kills. However there is an inherrent principal-agent problem. I think GS would fare just as well with a chimp in the top seat. For $70mil, you could probably afford two chimps, er CEOs
Posted by guest , Apr 11, 2008 4:06PM
@3:22 If Tiger Woods is shooting 114, he's not going to earn crap. If Oprah is getting the same ratings as Cody, she's not going to afford another mansion. GS is down over the past year. Deal with it.
@3:56 Agreed.
@3:59 True, but the stock will still be worth something because there's always some stupid analyst. Unless it's BSC and you screw up royallty. It's not like these people are going homeless. Compensation committees for the most part are like Ms. Dupree - ready to bend over at a moment's notice.
Posted by guest , Apr 11, 2008 4:07PM
What exactly does he do to earn that salary? I mean, sit behind a desk, attend meetings, play golf, schmooze, what? We can watch what Oprah does, what Tiger does. We see them - we don't see Lloyd doing his thing - which, again, is what, exactly?
Posted by guest , Apr 11, 2008 4:17PM
@4:05 Either way, that Blankfein is taking home 60 bps of the net income of the company could probably be argued that is a bit high.
Posted by guest , Apr 11, 2008 4:24PM
You know the day is coming congress tries to legislate the comp ratio down to 35%. Fear that day, ye who have not left to start your own shop yet.
Posted by guest , Apr 11, 2008 4:24PM
Anyone know, when the firm has internal hedge fund and management agreements with those who run them, does it count towards comp or other expenses?
Posted by guest , Apr 11, 2008 4:25PM
These guys live their jobs. Grueling days, global travel, always on. Motivating associates, charming clients, dealing with their Boards, government, press. Not easy. But on the other hand, how do you conclude that their efforts are worth $70 million of compensation? A comp committee does, looking at comparables, but in the end the comparables become inflated causes everyone is played against everyone else. No easy solution.
Posted by my2cents , Apr 11, 2008 4:26PM
http://www.reuters.comINDIANAPOLIS (Reuters) - Democratic presidential candidate Barack Obama denounced huge pay packages for U.S. corporate chiefs on Friday in a drive to convert middle-class anger about the U.S. economy into votes.
"Some CEOs make more in one day than their workers make in one year," Obama said..
I would like to see the celebrity death match- Lloyd up against Obama
Posted by guest , Apr 11, 2008 4:29PM
"What exactly does he do to earn that salary? I mean, sit behind a desk, attend meetings, play golf, schmooze, what?" - @4:07
Yes, And what exactly is it that Oprah does 360 days a year? Eat, sleep take a dump? What does Julia Roberts do? What does Warren Buffet do?
What you forgot, dickhead, is that Llyod Blankfein did not get $70MM on day 1 of joining Goldman. A few thousand others joined Goldman and other banks at the same time as he did earning way less. He was also born with WAAAY less. However, he earns $70MM at the end of a VERY successful career spanning 25+ years. Similarly Jimmy Cayne went to a billion after a very successful 35+ years.
"I bet if GS put a want ad for a new CEO for *only* $1 million, they'd do just fine."
Well, he could than always move to a hedge fund or some other private employer. Why are so many top managers headed to PE owned firms? You think Cerberus is paying Nardelli 2 couple of million?
If you 'decided' to pay the CEO $2 MM, then most of the people worth anything would never want to be CEO of that firm and leave for somewhere else. And the ones who would want to be so would clearly be the ones who COULDNT leave for anywhere else.
And so why pay the CEO any more at all? Why not pay everyone the same amount? I mean, surely, that would be 'fair and progressive' and have no issues at all?
Posted by guest , Apr 11, 2008 4:30PM
See, that's great for Lloyd, it takes him up to a week to earn what his average employee makes in a year!
Posted by guest , Apr 11, 2008 4:41PM
@ 4:29 it makes no difference whether he started day one at $70 mill, or worked up to it - that is a phony argument, revealing nothing, and the fact that he started life with little has nothing to do with what he now earns. would the firm earn less money if he was paid less? would he work less hard if he was paid less? I bet he'd work harder, to try to earn more. So, dickhead back at you - your comments don't illuminate.
Posted by guest , Apr 11, 2008 4:43PM
@4:29 Entertainers' salaries are obviously more directly attributable to their work. Your comparision is bad IMHO. I don't have a problem with compensation IF IT'S DIRECTLY TIED TO PERFORMANCE - like a hedge fund's return hurdle. Who cares if a CEO didn't want *only $2MM? I hate to tell them and you, but there are literally hundreds of thousands if not millions of people who WOULD BE IN LINE FOR THE JOB. Your last argument is just for hyperbole of course. When backed into a corner, we've all come to expect the communist/socialist/Nazi arguments to start coming out. A fairer way to pay CEOs would be to pay them a nominal base salary (like Thain's $57,000) and then have payment in stock options on the increase in share price each year over where the price started. If the stock of the firm decreases, they might starve and thus actually care rather than expecting corporate welfare.
Posted by guest , Apr 11, 2008 4:48PM
@4:29 obviously the answer is to pay each according to his needs and derive work from each according to his capability.
Posted by guest , Apr 11, 2008 4:52PM
ab @ 1:58PM "Say you take your "tens of thousands" of people and randomly assign P/L each year. Given the size of the pool, after a couple decades you're still bound to end up with at least a few people who consistently outperformed each year. Blankfein could just be the lucky one here."
Se lets take this forward. What you are saying is that there is essentially no difference between me and Michael Jordan or Tom Brady.
I mean you let 10,000 kids shoot some hoop and toss a ball and you will end up with one Brady and one Jordan?
Now lets say I took solace everyday from that thought what would that make me?
Posted by guest , Apr 11, 2008 4:55PM
Any use of the word luck in this entire board is beyond absurd. If I even have to explain why, then you'd be too inferior to even get it.
-Chad
Posted by guest , Apr 11, 2008 5:01PM
@4:43 said
"Entertainers' salaries are obviously more directly attributable to their work. Your comparision is bad IMHO. I don't have a problem with compensation IF IT'S DIRECTLY TIED TO PERFORMANCE "
EXACTLY! And how do you define performance? Blankfein made $70MM AFTER working for 30+ years as an outperformer in whatever he was doing - and outperforming some very some people in the same field. Britney Spears made her millions at 16 after singing 'ONE' song. Pro-athletes get signed onto multi-million dollar contracts without playing a SINGLE pro-game or after outperformaning for a couple of seasons at the most.
How do you justify that?
"Who cares if a CEO didn't want *only $2MM? I hate to tell them and you, but there are literally hundreds of thousands if not millions of people who WOULD BE IN LINE FOR THE JOB. "
I can line up 5 BILLION people who would want to take the job of CEO Goldman for $100,000. You point being?
Posted by guest , Apr 11, 2008 5:18PM
@5:01 My point is that if other firm's can find comparable talented folks for under 1 mill, why can't GS? Buffet seems to do just fine paying only $200,000. As for the prior argument, who cares if he worked 30 years? Does that mean everyone who retires should get $70MM because they work that long? You want some performance benchmarks? How about Mr. B earning X% after the stock returns Y% over it's current price? I don't have a problem with HF managers earning 20% after returning 15% or more to their investors. Or even 30% after return 50% to investors. I do have a problem with a CEO earning $70MM when the stocks tank. I could go on, but it will have to wait until Monday because it's Friday and Tiger is now up at the Masters.
Posted by mrpink , Apr 11, 2008 5:22PM
@ 5:01-
Sign me up. For 100k I want the free soda and the cute chair. Throw in a couple free ties as well. I'll only work about 2 hours a week, the rest of the time you may (or may not) be able to reach me on the free blackberry.
Oh, and I want a special addition made in my office so I can hotbox with my bridge buddies.
;-)
kplsthx,
PINK IS IZZZZOUT!
Have a good weekend dbdenizens!
Posted by diablo , Apr 11, 2008 5:45PM
The compensation system is rigged. So lets be honest and admit it.
Bess said it best:
"I am Lloyd fucking Blankfein. There will be no say on my pay. In fact, bitches, just because you have offended me, I want my 2008 bonus package to be determined today. $100 million. That's right, a unit, baby." Then dropped the mic and walked off. And you know what? They would've said okay.
Posted by guest , Apr 11, 2008 6:06PM
I am getting sick and tired of refuting all this Buffet bullshit and yet it comes up again and again.
"Buffet seems to do just fine paying only $200,000."
Do you ACTUALLY believe that number? And so I suppose you also believe that Steve Jobs and the Google dudes get paid $1? Hence why not pay all CEO's $1?
No one wrote Blankfein a check for $70MM. That is his overall comp. I find it amusing that for Buffet's minions you just quote the base salary while for others you quote all-in. What do you think is the 'effective' salary of Segey Brin and Steve Jobs (last I checked, I actually earn more than what you say Buffet pays and yet my lifestyle doesn't even remotely measure up to their. How?)
"..who cares if he worked 30 years? Does that mean everyone who retires should get $70MM because they work that long? ..."
Developmentally challenged? I said he 'OUTPERFORMED' for 30 years amongst a group of peers who were also highly talented in this field, therefore he deserves it. And it was in response to your saying how entertainer comp is pegged to performance. I showed how CEO performance is pegged to LONG-TERM performance (as it is very difficult to become CEO otherwise, unless your dad owns the firm. On the other hand, etertainer comp is pegged to instantaneous spikes in performance.
"I do have a problem with a CEO earning $70MM when the stocks tank."
Even Buffet believes in pegging performance to outperforming some benchmark. GS under LB (at the time of comp) MASSIVELY outperformed the broker-dealer sector. Hence if anything, it was richly deserved.
Also, you fakely claim that you dont care about $70MM when you clearly seem to think $200k (imaginary number) if fine.
So you raise BS point, and then carefully pick up rebuttals on some tangents - introducing new BS points while ignoring all fundamental innacuracies that may have been pointed out.
And if Buffet gets all stars for peanuts, how come is it that other private employers shell out big bucks. After all - they are putting their own m oney into the firm and arent exactly outside shareholders. So why would you not use THEM as your benchmark?
Posted by guest , Apr 11, 2008 6:43PM
One thing that is wrong about the system is that executives can be paid a massive amount for a past good year while heading into a very bad year. When the $250M was being handed out to the top five at GS in December 2007, there were a number of flags up that 2008 was not going to be such a great year for GS. Several GS hedge funds had lost a lot of money, the stock was down, and the executives should have had some idea of the dimension of pending GS losses. The economy and the market sure weren't ticking along nicely. Perhaps some of the money that went into executive compensation (and record GS bonuses) should have been held in reserve for the clouded future.
Massive amounts of compensation create a sense of entitlement among the top managers of public companies and the desire to have bigger numbers than your rivals cuts against a sense of commitment to the long-term health of the company.
Having said that, I don't agree with "say for pay" or abitrary caps. There's got to be a greater grasp of reasonableness by the Wall Street elite.
Even someone considered as "valuable" in sports as Alex Rodriguez found that his aspirations to extreme wealth exceeded the tolerance of the marketplace. No matter how well Rodriguez plays in the future, he's going to be remembered for his complete lack of finesse in handling public relations, which in turn hurts his income potential from other ventures.
Posted by Anal_yst , Apr 11, 2008 7:47PM
Jeesus H. Christ there are some incredibly ignorant people reading DB these days!
There are too many retarded comments above to respond to each in kind, to the point where I"m just at a loss for words. Sigh...
Posted by guest , Apr 12, 2008 10:27AM
Hey people, I'm an Exec recruiter. I interview at least 15 people every week, plus I meet with the people who hire my candidates. There is a difference in people. It is not luck. You can see it in less than an hour. You talk to people, you listen to what they say (listening is key) you totally can tell the winners from the losers.
Most people on DB, I would guess, spend their days glued to their computer screens. You really need to get out more (esp Random Banker) People like Lloyd got where they are because they're better than everyone else. Just true.
It's a lot of skills. Some of my clients are top in their fields and while their peers are jealous of them, even most of them will admit "that guy rocks, we hate him but he's good" I hear that all the time.
I interviewed a guy from Harvard this week who is out of a job. He must not have had good grades in Harvard because he swam in the shallows of Wall st firms for years. And while I'd love to get him a job (I'm on commission) I can tell that he's not a shark. In just an hour. Nice guy, but...
Seriously there is a difference in brains/ability and accomplishment.
Go interview people. You can tell, takes an hour, sometimes less. Lloyd deserves it.
Posted by guest , Apr 13, 2008 10:50PM
@10:27 I was buyin it until you gave the example of the Harvard guy. He must not have had good grades... Since when is being the smartest person around a prerequisite for success. In my experience people need to be adequately smart (which I'm sure the Harvard guy was) and then on top of that get the other things right: close deals, motivate people, remain cool under fire. You can probably tick them off more easily than me. Sounds like that's where the Harvard's guy's problem was.
Posted by guest , Apr 17, 2008 10:00AM
OMFG, 3:26, BRILLIANT !
I'm stealing your Idea.
Posted by guest , Apr 17, 2008 10:45AM
and you must not be a very good recruiter 10:27 if you had this guy and hsi resume for and hour and dont even know what his gpa is
Posted by guest , Apr 17, 2008 11:44PM
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