Yesterday on NPR, Robert Siegel spoke to Steven Hall, Managing Director of an executive compensation company, about how the investment banks Goldman Sachs, Morgan Stanley and JPMorgan Chase are giving its employees some $47 billion in bonuses.
SIEGEL: Well, it’s reported that Goldman Sachs, Morgan Stanley and JPMorgan Chase have combined, that is, have set aside $47 billion for bonuses. They know how unpopular these bonuses are with the public. Why so much pay in bonuses?
Mr. HALL: Well, first of all, I guess I have difficulty understanding a number like $47 billion. All of those zeros get me a little cock-eyed in terms of thinking about it. The way in which that total number is derived, though, is based on a sharing of the profits that the employees generate for shareholders.
You know, I sometimes help people think about big numbers. Let’s see what we can do with this one. That $47 billion is about $150 for every man, woman, and child in the US, or enough for three weeks’ worth of groceries. Gosh, when you put it like that, it’s peanuts!
Or maybe we should look at it per employee of those three companies. They’ve got some 300,000 people among them, so that works out to be $160,000 per employee, a mere four times the US per capita income in 2008!
Another way of looking at $47 billion is that it’s close to the TARP funds the three banks accepted in the last year or so. Why, no wonder Steven can’t comprehend such a large number!
But he feels the pain of those poor executives who are having to take a lot of their bonus in the form of company stock.
SIEGEL: Well, the banks, evidently, will pay more of the bonuses in stock -that’s obliging some pressure from the government. How much of a difference should it make if somebody who’s getting a million or two in a bonus this month gets it in the form of stock as opposed to cash?
Mr. HALL: Well, I think for some people – were they to get a bonus and if they were expecting the cash in order to be able to live on it, pay schooling for children, pay for that second home, pay other expenses that they have – finding that you’re not going to get the cash could be a little bit of a surprise.
Every once in a while, Misty and I will realize that we’re complaining about problems that 99% of the world’s population would love to have. When we do, we say, “Ohmygosh, my latte is too foamy!” to recognize that we’re being douches and should stop. I think I may replace that phrase with, “How will we pay for our second home?”
Mr. HALL: Yeah. I mean, it’s kind of interesting to think about. And, again, I feel for the problems that are going on here. But if [the banks] decided not to pay a banker as much money, how does that help someone on Main Street?
C’mon, people, what else could they do with that money? It’s not like they could invest it back into small businesses, or offer others the same low rates that the Fed has offered them! It’s either bonuses or they have to put that money in mattresses in all of their offices, and do you know how many mattresses you’d have to buy to stash $47 billion? There’s no other option!
Right, right, I’m being overly frothy. There’s no need for me to start handing out torches and pitchforks, even if I do like my nifty portable pitchtorch — it’s fire plus stabby in one handy package! After all, I’m sure the people involved can see why people are upset —
Mr. HALL: I wish people would understand that it is a very difficult world that we’re all going through right now, and I don’t make the rules. But I do try and report honestly on what I see going on out there.
You know what, never mind. Mr. Hall, I have a pitchtorch right here with your name on it.