Bonus Here, Bonus There, Bonus Nowhere!
Tuesday Oct 28, 2008
Here are 2 examples:
- 2006: Banker A works for the investment unit of Bank XYZ. He has a tremendous year, making money for his bank, and ending up at 200% of his target.
- 2008: Banker A works for the investment unit of Bank XYZ. He has a tremendous year, making money for his bank, and ending up at 200% of his target.
Looks exactly the same, no? Well, there is a big difference, we now live in different times. There is a financial crisis going on. I'm not going into details about the how, why and anything else, that is being discussed at length on other blogs, newspapers and sites.
What I do want to point out is the ridiculous situation where a banker who has performed exactly the same might not be receiving the same compensation now than 2 years ago. And that is a stupid situation IMHO. There is no reason why someone who has done an excellent job now should be treated differently than 2 years ago.
Where I do have a problem, and I am glad this is getting the attention, are the severance bonuses some of these CEO's, CFO's and other top executives are receiving, even after they might have ruined the banks or companies they have directed. There are very good reasons to investigate these and hold them back, or reclaim them, after some of the excesses that these executives have caused.
But please, let's try not get hysterical and see the difference between the two situations. If we continue down this path, these bankers (who are top performers) might not be performing as well in the future, which is about the worst thing that can happen now.
After all, there is one incentive that has proven to work well when you want to motivate employees: money.
What are your thoughts on this? I would love to hear your opinion.
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