Wall St. Pay: the (Dis)Honor System Lives!
So, how do people on Wall Street — and their defenders, like The Wall Street Journal — define “restraint?”
A. Turning down the heat to 65 degrees.
B. Cancelling their cable subscription.
C. Taking public transportation to work, instead of the car.
D. Paying one’s self only $9 million, instead of $68.5 million like in 2007 (when A LOT fewer people were paying attention).
If you need an answer key . . . you’re a newcomer to this blog!
And exactly who is this paragon of virtue and self-restraint?
None other than Lloyd Blankfein, CEO of Goldman Sachs.
The Journal was quick to paint Blankfein’s 2009 bonus (yes, we’re talking about a bonus — not base pay, not benefits, not lots of other goodies) . . . . as an act of sublime selflessness.
The steep drop from 2007 pay was a “bow” to public pressure, it declared in its headline.
Not only that, the compensation was all-stock.
The Journal’s not-so-subtle (or convincing) defense of Blankfein’s pay continues:
As Goldman rebounded in 2009 to its most profitable year ever, the 55-year-old Mr. Blankfein became the focus of anger about sky-high bonuses on Wall Street. That criticism continued even after Goldman said last month that it would make the smallest employee payouts relative to to revenue since the firm went public in 19999.
–“Goldman CEO Bows on Pay”; The Wall Street Journal (Feb. 6-7, 2010)
How reasonable of Goldman and Blankfein.
How fair of them.
Party Like It’s 2007
The truth is, Goldman and Blankfein’s record 2007 compensation was a lot like popping champagne on the Titanic at midnight the night it sank.
Incredibly, instead of feeling horror and shame for steering the financial system into an iceberg — and make no mistake, Wall Street was doing the steering — Wall Street effectively engineered a bailout that made itself (more than?) whole.
At the taxpayers’ expense.
And they’re still at the helm! (versus, say, in jail, or, banned from the financial industry for life, like disgraced Merrill Lynch analyst Henry Blodget was for causing .000001% of the havoc.)
As I said before, “disgusting.”
Pro Athletes’ Pay
I remember a cartoon that ran several months into the last baseball players’ strike (in the early ’90’s?), when ballplayers made a whole lot less than they do now.
The cartoon showed an unshaved, unwashed baseball player knocking on a suburban front door, with the caption, “mow your lawn for $25,000, Ma’ am?”
In fact, I don’t begrudge pro athletes a dime of what they make, because: a) it’s not coming out of my pocket; and b) it’s truly set by the marketplace.
For the vast majority of pro athletes, stratospheric pay is also extremely short-lived, and limited to a handful of truly gifted, high-performing individuals.
None of the above is true of Wall Street pay.