Submitted by: Editor
A Bonus by Another Name: Goldman Execs Cheat a Corrupt System
Wall Street banks have had a very good year as a result of the TARP program. Goldman Sachs, however, has had a tremendously good year. So good, in fact, that the worst recession on record since the Great Depression has delivered to them such an abundant bounty that Goldman Sachs has doubled, doubled, their annual bonus pool from 2008 to a whopping $23 billion.
The media has been in a tizzy this past week attempting to positively spin this seeming act of generosity into something equivalent to a paradigm shift within the banking industry. "They're finally getting it", according to those who want to believe that bankers are listening to the grumbling of the plebeian masses. If we are to believe the chattering "experts" who populate the MSM, the banking industry (and by extension, corporate executives) finally understand that they have suckled at the teat of the American consumer for too long and have miraculously refined their ways and have completely reshaped the way their industry functions. No longer will executives be paid absurdly outrageous salaries and bonuses because they "performed" thirty million times better in their jobs than the average employee.
Sorry to disappoint, but nothing has changed. Executives from many Wall Street banks, including Goldman Sachs, have forgone their bonuses for 2009 in order to shift attention away from their greedy scheming. Allow us to make something very clear ... The bonus pool for Goldman (and every other bank) has not been dissolved. Only the top 30 executives are giving up their bonuses. The $23 billion Goldman set aside for paying annual bonuses is still getting distributed amongst it's employees. Before you get settled, the estimated bonus pool for all major Wall Street banks for 2009 is approximately $120 billion. What did they need TARP for?
The average annual salary of an executive at Goldman Sachs is $600,000.00.
- this sum would pay for 115,000 students to attend Harvard University for four years or
- pay the average health insurance premium ($13,375) for 1.7 million families for one year. [Raw Story]
So where the hell is my bonus? My wife works for a company within the Goldman portfolio. She's consistently ranked, year after year, as one of the best and most effective employees, yet her annual bonus was a $20 gift certificate to Publix. She was thrilled to tell me today that she received a bigger than average raise ... A stunning 3% ... 13 times less per year than the base salary of a Goldman Executive. Or, 1,478 times less than Mr. Blankfein's 2007 bonus.
In 2007, Goldman paid a record $68 million bonus to chief executive Lloyd Blankfein.
The question that begs to be asked is this, "what job performance criteria can possibly justify a $68 million bonus?" A million dollar bonus is astonishing enough, but 68 times that?
Goldman execs aren't giving up anything
Goldman executives have conveniently shifted attention away from their "bonuses" by restructuring how they will pay themselves. Make no mistake people, the Goldman execs will be getting paid. They have agreed to be paid in company stock instead of a lump sum bonus on top of their salary. This concession means that each Goldman executive now has the very real potential to earn significantly more money than they would have been paid had they taken their cash option.
It's simple enough to argue that these men are so very important that they deserve to be paid massive sums of money to run the orgranizations that support our economy. Really? Why? What do they really do in an average day that justifies being paid salaries that are many many multiple orders of magnitude higher than any other working professional?
They don't do anything out of the ordinary. That's the rub.
Pay for Performance
At some point, a poisonously greedy CEO looked at the year-end profit and loss statement of his company and said to himself, "wow, after we pay our employees and deduct our expenses, there's still an assload of money left over." He then thought to himself two things. First he thought, "we don't need to reinvest all of that extra capitol into the company" and two, "If I changed the rules for myself and paid myself based on a percentage of sales, I could call it a "performance bonus" and walk away with tens of millions of dollars." His "genius" spread through the corporate world like wildfire.
The infuriating point I am trying to make is that these people, CEOs and executives, actually believe the job they do is so unbearably difficult that they deserve to be paid obscene bonuses. The culture of business in this country has become so incredibly corrupt that the pursuit of success has completely justified all means of accumulating wealth.
One final point
If these geniuses were so very genius, why were so many of the companies they ran suddenly all within a penny of bankruptcy? If each of the banks that accepted tax-payer bailout money had had $23 billion dollars set aside for bonus pools ... Why couldn't they bail out themselves?
It is also fair to mention that this is the same Goldman Sachs that refused to insure a 17 pound infant because it was "too heavy".