Schapiro To Take Over For Cox Under Obama (WSJ)
It looks like the embattled Cox will be retiring from the SEC after this year: Obama has elected to replace him with Mary Schapiro, head of FINRA since 2006. There has to be a question about vetting, as in: did or didn’t the administration actually look into Mary’s past. Mary’s the one that appointed Mark Madoff to the National Adjudicatory Council in 2001, which we have to assume is an oversight on the part of Obama’s camp if for no other reason than it’s so bloody insane it defies all bounds of logic. And then there’s the whispers that Mary didn’t really do much at FINRA except make things pretty by protecting the old people from annuity salesmen – and I’m not saying that’s not important, I’m just proposing maybe it shouldn’t be the chief qualifier for the next chair of the SEC. On the flip side, at NASD she worked through the perilous bid/ask “spreads” BS back in the mid 90′s, and “oversaw” the merger between the NYSE regulatory unit and NASD.
Goldman Bonuses Off 80% (FT)
“Partners at Goldman Sachs are set to see their bonuses fall by up to 80 per cent this year and the cash component of their year-end packages capped at $400,000″
We posted first year analyst numbers yesterday, and there were some comments suggesting first year associate numbers would come in at approx $100,000 – but this is really the first we’ve seen of a hard cap on the upper echelon. We don’t know what the rest of the comp package looks like yet, but it’s the same 5 year vest (and remember they’re moving from 55 year retirement to 60) that was mentioned earlier.
MS is also mentioned in the article as announcing yesterday that it’s bonus pool is seeing a 50% cut to reflect its “sharp fall in annual profits”, but until we see the actual numbers side by side there’s no knowing if GS has been usurped.
If you have numbers, send them to us at tips (AT) dealbreaker (DOT) com.
Bonus Structure Criticized, Again (NYT)
A rather long piece criticizing the bonus structure of the banks, and taking great pain to explore the paychecks of everyone they’ve ever heard of. One wonders if this isn’t a public appeal piece on behalf of our great Attorney General, but I digress.
I think there needs to be a concerted effort to move banks away from the use of the word Bonus, because in the rest of America it’s meant to be a term used for when someone does something particularly outstanding. Here though, it’s a part of the compensation plan – which should (does) have a completely different meaning – and the mass majority of people are just flat out missing that.
Of course I still hold that the mass majority of people are raging morons, but still.
Blagojevich Will Not Fill Senate Vacancy (FT)
I can’t believe that was even a headline.
US Tax Code To The Rescue (Bloomberg)
Just when the masses needed it most, the Government showed up on a white horse (no, not cocaine people, calm the fuck down):
“Capital-gains taxes paid by investors may be refundable for 2005 through 2007, lawyers said. In addition, they said investors probably can convince the Internal Revenue Service they are victims of theft, which would let them deduct losses from their income taxes dating back to 2006. Any unused theft losses could be used to reduce tax liabilities for the next 20 years.”
BNP Paribas/Fortis Merger Killed (CNBC)
The French/Dutch love child plan was killed after a court decision was handed down that effectively enforced a suspension. Apparently Fortis had a cold, and wanted her first time to be “special” – wait what?
OPEC Makes Cut, Oil Forgets To Respond (Reuters)
You have to know these guys are going to be pissed after their “I’m for Super Serious” meeting on massive cuts in production to protect price points.
Biggest Madoff loser, Fairfield Greenwich, eyes legal move on PwC (FT)
Yup.
–William Richards
Goldman partners: This is you que to join the public sector and purchase Senate/House/gubernatorial postions. You corrupt bastards.
@1 ?
Is this tax move going to actually help anything?
“Compensation Plan Structure Criticized, Again” Fixed.
ummm…Shapiro? Wasn’t NASDR supposed to be the ones overseeing Madoff? Just a thought here, the SEC is ultimately responsible but isn’t FINRA supposed to do the heavy lifting…….
On that NYTimes article about the evil bonuses, the graph for income produced by financial firms goes to 2008 – showing the large drop in profit. Curiously, the financial sector salaries graph only goes through 2007, thus missing what will clearly be a large downturn.
But never mind that. Oh and also don’t notice the fact that even if financial firms’ profit decreases to ‘only’ 20% of the total US, salaries will still be less than 10% of total US wages.
What’s important is that some people earn more money than others and we need to change that because “it’s just not fair.” Sniff. (Whipe tears from my hard working, actually creating something eye).
“Of course I still hold that the mass majority of people are raging morons, but still.”
Hammer, meet nail.
How can you say that bank bonuses aren’t bonus? In a normal year, if you do a fantastic job, you get a huge bonus. If you don’t, you get a much smaller bonus. It’s performance based compensation. It’s a bonus, plain and simple.
Let’e be honest. Financial workers earn more not because we were much smarter or worked much harder but simply because we work with money – other people’s money. Stop spinning it for your base, Dealbreaker.
Yes, OPEC is just gritting its teeth right now. http://deltahedged.com/2008/12/17/opec-agrees-that-it-intends-to-cut-oil-production/
And just as everyone forgot about the automakers (thanks 0% rates), the White House pulls everyone right back in.
How many Goldman partners can you fit into an ashtray?
@7, it does not take away from the fact that there will still ALWAYS be something paid irrespective.
A top of the class grad working at a big IB in NYC and a middle of the class guy from a state school working in the corporate finance division of some firm in Milwaukee both get roughly $50-55k base.
The first guy pays much more in taxes and pays 4 times as much to stay in a house 1/4 the size and works twice the hours. Absent a fixed year end payout, the compensation will not make any sense.
You may ask – why not just pay a bigger base? Good question. The answer to that (I think) is that the superiors need a stick to drive the lowers to work as hard. Hence the base is kept very low and the difference is made up for in the year-end payout.
I have worked at a middle-of-nowhere corporate finance department and now work in the city and I know the numbers as I have had to live through it.
@8.
Bonuses are part of the compensation just like tips are for waiters.
Ah Mary. FINRA is going to escape blame on Madoff because the problems were in the IM unit over which it has no jurisdiction. And just a guess here — Madoff stopped actually trading for these accounts a few years ago. All the docs are false, and probably weren’t sent out by the real brokerage unit. (All speculation on my part, but still).
The real “problem” the industry is going to have with her? She’s an advocate for an SRO for the investment adviser industry, which has vigorously rejected that idea. Interestingly, both sides of the debate will be pointing to Madoff.
@10, OK, I’ll bite, how many?
Pretty poor DB, do you really think that bonuses are not based on performance? For the last couple of years people were paid great money bc they were making some great profits. This year they are going to get paid some pretty crappy money bc they made some bad moves. Should their be no downside risk? If thats the case then just give them all the money in there paycheck.
I think it’s been called (officially) a “performance incentive” at every place I’ve ever worked.
I guess it’s hard for somebody in retail sales to understand that we’re not so interested in Wall Street for $100k/yr and a jelly of the month club certificate once a year.
The best scientific study on bonus structures has to be this, “participants who were penalized based on low performance not only cheated but also stole the nice pens that were to be returned at the end of the study!” Hilarious.
http://86andlex.wordpress.com/2008/12/18/they-stole-the-pens/
DAMN!!!
That chick doesn’t have a forehead, she gotta FIVEhead!!!
@5:
Nah. I think most people are upset because while they begrudged wall street its bonuses, the average person always believed people on the street were indeed the best, the brightest and the hardest working.
Now people see all the banks failing, and causing all of these negative externalities and asking for bail outs. And people are wondering, “WTF, these wall street people were getting all that money to run their companies into the ground?” So your Joe the Plumber assumes the street is either a) really stupid and never deserved the money in the first place or b) the whole thing was a Madoff Scheme.
Since they would be happy to receive an MD’s bonus for just one year. The average person doesn’t really care how much future compensation is going to be cut.
In reality of course the answer was c) all of the above.
But because of a) the banks lack the faculties to realize b).
#15, 11 here.
I did NOT day that the ‘bonuses’ are not performance linked.
All I am saying is that even this year, you will see people getting paid sizeable (by others standards) numbers being paid out.
There has to be a necessary component to equalize the salaries. I am talking analysts and associates, and sometimes VPs. Beyond that it is a different world.
Based on what I was paid as an analyst when I worked middle of nowhere, you would have to pay analyst here in the 100k range total comp just to adjust for cost of living (no, not bottles and models but rent, taxes etc). And I am not going into the hourse worked or the fact that this guy did – at least in school – perform better than the other guy.
@12 – and if you serve shitty food, waiters don’t get good tips. Make sense now?
@21
Unless you’re in New York. Where almost any service rendered automatically “includes” a tip irrespective of how many are in a party…
Does THAT make sense???…
Anyone know why clusterstock is down?
I heard that total cash comp was capped at 1M. PMDs make 600k, so your 400k cash maximum seems accurate.
Start buying condo futures for 2013 delivery.
@23, just guessing but maybe because the site sucks dick?
@23 it’s not. just checked it.
@26 THX for running over to check on the d!ck sucking!!
@21 – Shitty service means waiters dont get ‘good tips’ but they get 15% irrespective to get comped up to minimum wage. Get it?
What’s more they get taxed on a presumed 15% tip – so if you tip nothing at all, they actually lose money. Not so dissimilar, considering the high marginal rate of taxation in incomes, property, commutation etc..
@28, so you deserve minimum wage, and that’s it. Thanks for the clarification.
And shitty waiters get shitty tips. You don’t ‘deserve’ anything. If you deserved it, it would be in your salary.
Here’s the thing about bonuses:
If you call them a “bonus” or “performance incentive” or whatever else that makes it sound like its not the main comp, it may look worse in the newspapers, but it looks a lot better when you can somebody and they sue to recover what they think their full earnings should be.
Call it “deferred compensation” and you’re gonna owe it to them.
#30, you are an idiot who is just here to avoid logic and spout BS.
I told you that the min level of ‘bonus’ is to at least normalize analysts of all stripes and in all geographical locations to the same comp. Unless you are claiming that all people in all professions need to be paid minimum wage, I do not see what you are trying to say. Or may be you are just a retard.
@20 – the bitching is really due to the fact that bonus’ aren’t performance linked. In a good year they’re very good; In a bad year, they aren’t as bad as the result to the firm. Noone gets a negative bonus when results are re-stated.
@11
Blah, how, in America, did people develop this attitude that “hours worked” or “performance in school” has anything to do with PRODUCTIVITY. Ya, you know, the production of “goods and services having exchange value.” According to your logic, getting straight As and then digging random holes in your backyard from dawn until dusk should automatically qualify you for a large salary and bonus. Furthermore, in the case of Wall Street, digging holes would have been a preferable activity as it would have cost society less than the clusterfuck that resulted from mortgage backed securities and all. So, after all of this, to hear people whine about compensation is beyond unbearable – it makes me feel like we are in the Soviet Union and that, because you have worked to the best of your ability and because you have such great NEED, we must pay you what you think is fair. Again, blah!
It’s not just shitty service, but the waiter is fully aware that the food you eat will guarantee you massive diarrhea. Do you want to reconsider tipping the waiter now?
@5 & @8: what exactly is it you do to earn your pay? What part of ‘financial industry parasite’ do you not understand?
Go make up some more CDO/CLO/RMBS/CMBS/CDS digital knock-in out & up crapola. Now sell it to yourself and mark it up hahahaha….how’s that working out for you?
wow, that is one ugly chick. i’d do whatever she said just to make her go away…
wow, that is one ugly chick. i’d do whatever she said just to make her go away…
#36, the ABS stuff was necessary so that useless human trash like you could use a credit card to buy a laptop, using which you now spout BS.
You know that hundreds of millions of people in this world with your level of education and skillset bike 25 miles to work at a shop floor and go to sleep in a shack half hungry at night, right?
You are welcome.
the real issue with regard to compensation on wall street is that it provides the chance for unlimited upside with no downside. employees don’t risk their *own* money. this risk/reward ratio is completely skewed–heads i win, tails i break even–and encourages excessive risk-taking with shareholder money. i’d take this trade *every* time.
the only risk employees face is the potential opportunity cost of having worked elsewhere–which can be substantial for an intelligent individual. nevertheless, the structure of compensation clearly needs an overhaul.
“the real issue with regard to compensation on wall street is that it provides the chance for unlimited upside with no downside. ”
You realize that thousands have been fired with no notice and little severance right? Comp is also down >50% in less than a years time for those that still have a job.
On the other hand, ever tried firing GM workers or reducing their benefits/salaries?
#40–nothing new here on the “principal/agent problem.” It’s also known as the Trader Option: Heads, I get paid, tails, i don’t but downside is floored absent fraud. The long term compensation addresses this only partially.
The real answer is to take these companies private again. With leverage down, public markets are less necessary. And you can still go after public debt as a private company. Private companies make more rational financing and compensation decisions…it’s their money. In most cases, there is nothing illegal (sorry, AG Cuomo) about how these companies paid their people. And it will happen again. The market will dictate higher compensation when revenue increases. The right answer is to re-align interests so that self-interest regulates, not government interest.
Henceforth the “bonus” will be referred to as “discretionary deferred compensation” or DDC!
@42- agreed. private partnership was a better structure for these firms.
@41- your comparison to gm is specious. in any given year, gm workers don’t have the same potential upside. gm employees join a union and collectively bargain. if you like the terms of their negotiated contract, try starting an i-bankers union–or submit your resume to gm. would you rather have been at bsc or gm over the last 10 years?
comp down >50% is still a better (positive) return than anyone dumb enough to have been a bank shareholder over the last year. i’m sympathetic to people who have lost jobs and will experience a change in lifestyle; however, the terms of “at-will” employment are clear. if they didn’t understand that getting fired was a potential outcome (their risk still equals accumulated comp less opportunity cost), they shouldn’t be advising others on how to deploy capital.
this is the end of a mammoth financial bubble, it’s high time the mediocrities were culled.
mary shapiro is going to one annoying bitch. she looks like a lunch lady at a nazi german elementary school
I think my favorite oversight on this board is the confusion between personal performance compensation and market performance compensation.
High tide lifts all boats.
I think my favorite oversight on this board is the confusion between personal performance compensation and market performance compensation.
High tide lifts all boats.
I think my least favorite oversight on this board is the confusion over how many times you need to click “post comment.”
Just once.