Compensation

Wall Street Compensation Set To Decline

We’re all too familiar with the story of layoffs on Wall Street and a hiring slowdown is clearly undeway. But even those who find new jobs will likely be stung by the the downturn on Wall Street. Wall Street compensation packages for new hires are expected to decline by as much as 20 percent, according to a survey of leading recruiters released today.
“Recruiters are in virtually unanimous agreement that compensation for new Wall Street hires will decline, although there is some disagreement as to the extent of the downturn,” according to specialized research firm smart cube.
More than 40 percent of recruiters surveyed expect compensation will decline by as much as 20 percent, while 22 percent expect the decline to range between 11 to 16 percent, smart cube’s research shows. About one-fifth of the survey’s respondents were less pessimistic, predicting a decline of less than 10 percent.
London will also take a hit. In fact, recruiters there are even more pessimistic.
“In addition to imposing layoffs, investment banks will only recruit new employees in areas where there are critical openings that absolutely need to be filled. With Wall Street unemployment steadily rising, the job market pendulum has clearly shifted in favor of employers,” says Omer Abdullah, the smart cube managing director who oversaw the survey.

lookatthispictureandtryandtellmeyoudon'ttakemeseriously.jpgThank god, the money managers have weighed in and decided: A-Rod was entirely justified in opting out of the final three seasons of his contract with the Yankees. According to Daniel Alpert, a partner at Westwood Capital, a boutique investment bank in New York that specializes in mortgage and related securities, “there’s nothing cold blooded about it.” And what’s Balestra Capital founder James L. Melcher’s take on the situation? “Not only do I have no problem with it, I’m cheering him.”
Can you imagine what would happen if these guys didn’t stick together? When you’re trying to rip people off, the moral support of your peers really counts for a lot. (Investors in) Absolute Capital know what we’re talking about.
Rodriguez Not Greedy by Standard of Wall St. [NYT]

Rich People Are Awesome

wallstreetbonus.jpgDelving further into its favorite class war between the Haves and the Have-Mores this weekend, The New York Times found that in Silicon Valley, people who are rich don’t feel rich compared to their very rich neighbors. And they’ll try anything—even working a whopping twelve hours a day—to move into that next tax bracket. You know, the one that will make them feel a sense of superiority and self-worth and raison d’être. Just like us (you)!
Yes, many members of this “digital elite” feel bad about themselves because they are “surrounded by people with more wealth—often a lot more.” One gilded geek, Gary Kremen, pouts, “It’s just like Wall Street, where there are all these financial guys worth $7 million wondering what’s so special about them when there are all these guys worth in the hundreds of millions of dollars.” Reminds me of this story Keith likes to tell about sitting in the steam room of the 92nd Street Y with an inconsolable Daniel Seth Loeb, weeping over the fact that he made $150 million last year, sure, who cares about that when James Simons is spending that much on cigarettes annually?
But lest you think you and your West Coast brethren are too much alike, the Geek Squad makes sure to point out a notable difference: they feel bad about it. Sure, talent played a role in their good fortune, but so did “being at the right place at the right time” and many feel “sheepish, even at times guilty about their piles of cash.” See, they’re just as obsessed with money and chasing the top one-tenth of a percent (if squarely in the top one percent), or the top one-one-hundredth of one percent (if in the top one-tenth of one percent) as you, but in Silicon Valley, they’re introspective and self-doubting and have issues about their stacks of gold. Sometimes they even cry about it (when was the last time you shed some salty discharge over your bonus? And not the “I feel bad about my bonus because I got screwed out of three extra zeros so I’m going to silently weep about it in a little locked room” kind).
Which begs the question: Is it better to be a rich prick who questions his/her rich prickocity or a Dealbreaker reader? (I love you people, I do).
In Silicon Valley, Millionaires Who Don’t Feel Rich [NYT]

  • 10 Jul 2007 at 10:47 AM
  • BP

Lord Browne Is Not Getting Any

lordebrownREX0105_228x366.jpgRemember Lord Browne, the BP executive who parted ways with the oil company back in May because he got creative with the truth regarding his personal life in court, forfeiting an estimated £15m ($30 m) and, more importantly*, if we’re going to split hairs, his spot as a director at Goldman Sachs? He’s now had an addition £1.5m ($3 m) owed to him frozen by the oil wooly-haired mammoth, until a court case is resolved.
At issue is what a few shareholders believe was mismanagement (“draconian,” yes draconian now, cost cuts prior to a pipeline spill, etc) in Alaska. They are seeking unspecified damages from 39 current and former BP executives and directors. To be clear, this suspension of pay is only to facilitate the funds being turned over to the injured party (who believe it would be “difficult” to recover the money from the Lord) when and if the shareholders are successful, and has nothing to do with the gay witch hunt from earlier this year.
BP freezes payments to Browne [The Guardian]
*it’s never about the money.

There may be some tension in the NYSE Euronext cafeteria. Financial Times reports that Jean-François Théodore, the French John Thain (he’s like JT but wears a red smoking jacket and says ‘ménage à trois’ instead of ‘threesome’), i.e. chief executive of the Eurnoext, was paid less than a fifth of what Thain earned last year.
While Thain enjoyed a nice $9.36 million (€6.9m) paycheck, Théodore was awarded a measly €1.33m ($1.81m): barely enough to buy barely enough to buy a nice pair of frogs’ legs. Lest you chalk this up to an example of Americans working harder and taking less vacations (and paying for their health care) than Europeans, and being rewarded accordingly, note this: the Euronext was more profitable than the NYSE last year, with net profits of $504m versus a paltry $205m.
There’s a chance that Théodore will have an additional €200,000 thrown his way, following the Euronext’s shareholder meeting next week, if the board recommends that shareholders reward him for his “vital contribution” to the merger but at this point, we’d advise Theo (can we call him Théo?) not to accept anything less than $9.36 million (€6.9m). €200,000 is just insulting.
Théodore earns fraction of Thain at NYSE [FT via DealBook]

Commie Schadenfreude

russia.jpgFirst: please continue to send us your projected bonuses. Second: not to bite the hand that feeds us, but where were you on this one, ladies? Bankers in Moscow making twice as much as their counterparts anywhere else? Including Goldman MDs? Industry recruiters tell Bloomberg that managing directors dealing with corporate mergers and stock/bond sales in Russia are earning $7 million plus a year, versus the 2-3 million that guys (and girls) doing the same work in New York are making.
Compensation rose 25% for bankers last year in Russia, on account of a 5-year oil boom, a record number of IPOs, and Russia’s place as the fastest growing major European economy. Goldman says it will double its Moscow staff to 70, Morgan Stanley to 100 (from 20). Interested in submitting an application? Securities firms are looking for “a combination of western experience and an understanding of the local conditions,” including but not limited to a vodka-specific alcohol problem. If you do make the move, there’ll be more than pogroms and long lines for bread in store for you.

Inside Moscow’s Garden Ring, bankers spend $7 million for a five-room apartment near the Bolshoi Theater, drop $350,000 for a Bentley at the car dealership next to Revolution Square, and rent private dining rooms at Turandot, a new $50 million two-story restaurant furnished in a late 18th century Marie Antoinette theme, complete with musicians in white wigs playing chamber music.

Who’s interested?
Moscow Bankers Get $7 Million Payday, Double New York Average [Bloomberg]

ben_affleck8.jpgFord revealed today in its annual proxy that Chief Exec Alan Mulally was awarded a $7.5 million hiring bonus and $11 million to “offset” the compensation he lost for leaving Boeing last year. This is an interesting bit of news, considering that the automaker hemorrhaged $12.7 billion last year. The previous CEO, Bill Ford, did not receive a cash salary, bonus, or stock awards, since he had decided in 2005 to make himself a martyr “a commitment…to forgo any new remuneration until the company’s auto unit made sustained profits,” which might’ve seemed like more of a HUGE sacrifice if his family didn’t…own the company (or a sizeable amount of it).
Another way to look at this is that when you’re basically just putting money in paper bags and lighting it on fire, $28 million is just a drop in the bucket.
We’re also pretty sure Alan’s one of those guys with an “Act As If” attitude, since a friend of a friend of a friend told us recently that AM preemptively sent a note to the board of directors expounding on this philosophy. He allegedly went off on a tangent for some time about how “if you want to save this company, I’m going to need some serious clams. I’m talking dollars. Big money, hoooo! You think if I show up in public dressed like a hobo, it’ll convince people that they want to drive a Ford? No, if anything, it’ll bolster their decision to buy one of those, what’s the word, what’s the word, what’s the word—Monopoly cars—a KIA or something. Personally, I drive a Beemer; don’t take that the wrong way, no offense to the brand, but, like I said, I’ve got to act like we’re just rolling in the money, and if we’re getting naked and rolling around on piles of $1,000 bills, that’s got to mean something. Don’t take that the wrong way—that wasn’t an invitation from me asking you guys to get naked and roll around on piles of money with me, or a come on by any means, just an illustration. Anyway, the money—I’m going to need a lot of it. I’m also going to need you to send a few extra-plush robes over to my office for the price of—on the house. ASAP. We’re going to save this company, together. –A.”
Mulally gets $28 mln amid $12 bln Ford loss [Reuters]

bfeinhouse.jpgApparently Lloyd Blankfein wasn’t reading Dealbreaker the day we clearly laid out a bunch of alternative ways for the Masters of the Universe to spend their bonuses, back in January (the acquisition of hornymantee.com, 2 million Jim Cramer bobblehead dolls, an all-access pass to the Andrew Ross Sorkin Pleasure Palace, and so on and so forth). Radar reports that the old boy has purchased a $41 million home in Southhampton (which apparently retails for such a sizeable chunk of change because it comes with a name: “Old Trees”), on First Neck Lane.
Spread out on 10.6 acres, the estate boasts a clay tennis court, an ocean-view swimming pool, 13 bedrooms, a “cottage” (with its own pool) and a “barn” for entertainment. Stephen Schwarzman couldn’t be reached for comment, because he’s in the midst of planning a surprise hostile takeover of the property. On a related note, Tom Hudson has just agreed to go in on a summer share in hell.
Sachs’ CEO Drops New Money on ‘Old Trees’ [Radar]