Bonuses on Wall Street
Posted: January 22, 2010
I have never had a problem with someone who makes a lot of money. Some people cannot accept the fact that professional athletes earn millions of dollars for playing their game and accrue millions more in sponsorship deals. Others do not like the fact that musicians and actors/actresses earn eight figures to go on stage or star in a major motion picture. Frankly, if I were to have a difficult time accepting what those in the entertainment business earn, then I should not purchase any of the sports apparel, CDs or DVDs that helps feed the high-dollar salaries.
But, I do not have any tolerance for the glutton of bonuses being paid to executives on Wall Street - especially if the employer received government assistance when the market went into the tank last year. According to the Wall Street Journal, the total annual compensation package that will be doled out to the "financial gurus" will amount to $145.54 billion - equal to each financial services employee earning a bonus of $148,877 on average.
The only saving grace with this whole charade is that most of the bonuses being paid to Wall Street executives will be awarded in the form of shares of common stock. This is most gratifying to me since I am of the belief that employees should be compensated when the company does well and not given anything in the form of a bonus if the employer is not making any money - or using taxpayer dollars to sustain their business model.
Meanwhile, the Obama Administration is considering a proposal to implement a tax on the biggest banks in the amount of $1 billion per year for the next 10 years in an effort to offset and/or penalize the largest financial institutions. That is just about the dumbest idea I have ever heard.
While small business owners attempt to obtain financing for a building expansion or equipment purchase, banks will now be punished for making too much money or handing out large paychecks to their best employees. So if is not already nearly impossible to qualify for a loan, the biggest banks have a built-in excuse to not lend since they will be required to pay Uncle Sam a billion dollars a year.
I realize that Wall Street needs to retain their best workers by paying them with some type of bonus. But I do not understand how an annual tax on the largest financial institutions will justify the outrageous bonus packages being handed out. Yet, a tax on those same institutions is counterproductive to spurring the economy. Performance pay is the only way to go.