Putting Wall Street on the Main Street Compensation Plan
It comes down to reality - and it's fine with me 'cause I've let it slide . . .
I'm in a New York state of mind.
-Billy Joel
Merrill Lynch CEO John Thain wants a $10 million bonus for 2008. It is not going to happen but the idea that he requested it shows the disconnect between Wall Street and Main Street.
I always thought that bonuses were paid by companies that made profits. Merrill Lynch lost $11.67 billion this year.
I also thought that in order to get a bonus, a company had to still be in business. Merrill Lynch was taken over by Bank of America. The original company is gone.
Those of us who run our own businesses don't get bonuses if we lose money. We usually don't get bailed out or taken over. If we lose enough money, they lock us up and board up the front windows.
I don't understand why people like Thain can't get that. He ought to be able to get by without a bonus this year. He got at least $15 million in 2007. Even with a high powered, Wall Street lifestyle, he ought to have a few dollars left over.
And he also should understand that he is putting a stick in the eye of all of us in Main Street America.
Like many Americans, I never wanted the $700 billion Wall Street bailout to happen. I thought it was Washington insiders bailing out their insider buddies on Wall Street.
Absolutely nothing that has happened since then has convinced me otherwise. In fact, the longer I look at it, the more I realize that Paulson and his crew cares only about Wall Street and no one else.
The American people have been the outsiders, but they are the ones who are footing the bill. And they truly resent it.
As Americans cut back severely on holiday spending, get fired, see their retirement savings drop and live with the daily gloom that a worldwide recession brings, they don't want to see anyone else getting special favors.
Especially not Wall Street CEOs.
Average Americans are a lot like me. They figure that the insiders stuck it to us but there is little to do about it now. The big banks are not giving the $700 billion back.
Every time I see another Wall Street-type trying to get a multi-million dollar benefit for himself, it sends up my blood pressure. I feel like the people on Wall Street are rubbing our noses in it.
It's like the bully in school who steals your lunch and eats it right in front of you. You get angrier and angrier with each bite.
If the American people have made one thing loud and clear, it is that we don't want bonuses paid to Wall Street CEOs. We don't want them flying in private jets or paying for all their buddies to go on long junkets.
We want them to act like the rest of us. Or, at least, a little bit like the rest of us.
That is why I want all Wall Street companies to live by the same rules that Main Street businesses live by.
Executives' bonuses should be based on profits. No profit = no bonus. My business, like almost every other small business in America, only compensates executives when we actually make money. That seems like a simple enough idea. Bonuses shouldn't be some multi-million dollar figure that comes out of the sky. If anyone on Wall Street gets a bonus, it should be based upon how he increased value for his shareholders and stakeholders.
There is a different wrinkle for the Wall Street executives. Most of them are being bailed out by the American taxpayers. Thus, they should act like public servants. You don't see government bureaucrats getting big bonuses or riding in private jets or limos. Their salaries are fixed by civil service grades and cost of living increases.
The people on Wall Street can't have it both ways. They can't take the American people's government money and ignore the American people. They need to recognize that a lot of people on Main Street don't like what they are doing and are getting angry that no one on Wall Street or in Washington seems to be listening.
If the gang on Wall Street lives by the same rules and realities that those of us in small business live with everyday, they will get a better feel for what Americans really think about them.
And maybe stop rubbing our faces in the dirt.
Don McNay, CLU, ChFC, MSFS, CSSC, is the Founder of the McNay Settlement Group in Richmond, Kentucky. He is the author of Son of a Son of a Gambler: Winners, Loser and What To Do When You Win the Lottery. You can write to him at don@donmcnay.com or read his award winning syndicated financial column at www.donmcnay.com
Follow Don McNay on Twitter: www.twitter.com/Donmcnay
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No individual has any legit reason for needing millions or billions. Some businesses, if they are run properly do need that much.
Loopholes, bonuses, all that, just make a tiny percentage ridiculous rich and everybody else so much poorer.
Don, I generally agree with your columns and I like you anyway (being from Lexington, I met you). But I read the following line of yours - "You don't see government bureaucrats getting big bonuses or riding in private jets or limos. Their salaries are fixed by civil service grades and cost of living increases.
I also recall that President of the University of Kentucky Lee Todd got around 550k in compensation last year, of which 125k bonus was a big chunk (US President is a sucker compared to this pay.) Now, if the University moved one inch in the US News and World report rankings (the only ones that are credible and actually count), I'd say: Heck, give him that bonus! But in six years that Todd is at UK helm, the University only floats below the mark where he was first appointed.
What do we expect from private hacks like Thain, if "public servants" like Todd get bonuses for destroying the employee morale and consequently letting the all-important rankings slide? After all, private guys only steal from willing investors, while overpaid public servants from everyone..
"Like many Americans, I never wanted the $700 billion Wall Street bailout to happen. I thought it was Washington insiders bailing out their insider buddies on Wall Street. Absolutely nothing that has happened since then has convinced me otherwise. In fact, the longer I look at it, the more I realize that Paulson and his crew cares only about Wall Street and no one else. "
I absolutely agree with the tone and tenor of your article ... you write really well with the visceral edge of someone who "is" there not some one who's "been" there.
Here's hoping to read more from mainstreet.
I think, at this time of economic calamity brought on by the greed of the rich, it is time we reintroduce the 90% tax bracket. All income (earned or otherwise) above $1 million should be taxed at this higher rate until the economy recovers and the national debt is paid off. It has been the rich who have benefited the most from the past 30 years of economic growth while the national debt has skyrocketed and the rich who are getting bailed out with taxpayer dollars. It should be the rich who foot the bill.
You nailed it DXM - I vote for your plan!
"And he also should understand that he is putting a stick in the eye of all of us in Main Street America."
They KNow that. All of them do, including the Politicians in their pockets.
They do this on purpose, they Literally laugh while they think of the poor masses of slobs they are taking advantage of while they carefully Aim for the EYE with the stick.
People that Assume any of these Overpaid, Windbags of Crime that are the richest americans with all the contacts, all the opportunities, and all the favors actually are just kinda "out of touch" ...etc. are the ones that are "out of touch" with reality.
They think all of the regular americans are only good enough to be their Drivers, maids, butlers, concierges, servants, whipping posts, etc.
There is all the evidence in the world that for decades the Rich have pushed legislation to help themselves take more money from the poor, ASIDE from doing business ethically.
ITs the War on the Middle class thats been going on forever. Class warfare by the rich has always been a problem. Why would such a tiny population of people wield so much political power unless they held the politicians in their pockets.
There was a time and place in history when money changer/lenders who went bankrupt were beheaded and their heads were impaled on a stake and placed in front of their "former" place of business. We have, thankfully, moved on, but I would like mug shots. I want to know who, in AIG, abused our hard earned $$.Yes, public shame. I am a public school teacher, if I mess up I will have the wrath of my students, their parents, my colleagues, administration, et al. And rightly so.
The Berk Plan
A Contract between Main Street and Wall Street
Attention Senators, Congressmen and staff…and all CEOs in line for
TARP money or any other federal money…take the pledge!
Conditions herein must be met before any money changes hands.
A company or fi nancial institution receiving Tarp money or
Bailout money from Treasury, Federal Reserve, or FDIC must
agree to the following:
1.
Its highest offi cer, President or CEO will be paid no more than the
president of the United States. Till loan is repaid in full.
2.
The next 25 offi cers in line shall receive no more than a United States
Senator or Congressman. Till loan is repaid in full.
3.
During the term of the loan there will be no bonuses, stock options, or
health care till loan is repaid in full.
4.
The CED and top 25 offi cers must pledge all their personal real estate
as collateral for this loan. This includes property held jointly with
spouse. Their principal residence as well as any other real estate they
may own as an individual or with spouse.
5.
No legal counsel needed for this agreement. If loan is not repaid to the
taxpayers of this great nation… they will lose the home and any other
real estate they may own.
Email all your friends…Co
It’s OUR money. Give the CEOs a stake
I like it. I like it a lot!
But it makes too much sense and it implies personal responsibility which is something that rich people, who never take any, are always more than happy to preach to poor people about.
I guess it keeps us in line and makes them feel that our position in the world is our own making.
I don't understand the comment of "the big banks are not giving the $700 billion back", first because less than half that money has been used and second because the money that was used was used to buy preferred equity in those banks. How, I wonder, does the author not think the govt will get that money back? Does he think the value of the equity will ultimately go to zero? If so, then the stock market, the bond market, and the economy is in a lot more trouble than even the most pessimistic people realize.
This, This is what we are missing in congress..
If you tax ultra high salaries and bonuses at a higher rate, salaries and bonuses would go down. I think it is ridiculous that the top tax bracket starts at an income of only $338,000 (or so). There should be another higher tax bracket of $1,000,000 or $750,000 that is taxed at 50%, which is the same rate that existed during the first six years of Reagan's presidency.
Don't they have to pay the money back within 5 years?
Our government wouldn't have just given them that much money, would they?
I wouldn't think there is a way that could be legal.
Even letting them put the country in a bind like this is bad enough.
" Like the Bully that steals your lunch and eats it in front of you." I hear you! Paulson is a super con, for that matter, the whole of the Bush gang, can con a bird out of her nest. Sometimes I think I am dreaming, this nightmare. I'ts so blatantly awful, a disrespectfull display of an over engorged ego. I would be ashamed if it were me. They need a rock to hide under. I think that America has lost every vestage of pride, and thats not a good thing. Powerless is for 12 step programs not America.
MELE KALKIMAKA WALL STREET
(Mele Kalikimaka, Bing Crosby Christmas)
WilliamBanzai7
SECURITIZED ASSET MARKDOWNs is one way say no bonus will be paid for Christmas 2008
That's the shareholder greeting to be sent to them from the land where no dividends are paid
Here we know that losses are obscenely high
If you think you are underpaid then go take a hike
SECURITIZED ASSET MARKDOWNS is the shareholder way to say no Merry Christmas bonus for you
The Andrew Sister's, Andrew Cuomo and Bing Crosby:
There they know that LOSSES are OBSCENELY HIGH
If they think they're underpaid then they should go take a hike
Mele Kalikimaka is the perfect way to say NO CHRISTMAS BONUS FOR YOU
Mele Kalikimaka is what we all should say to WALL STREET BANKERS WHO WANT A YEAR END BONUS PAID
Thats the perfect message to be sent to them in the land where bailouts saved the day
Here we know that LOSSES HAVE BEEN OBSCENELY HIGH
LETS TELL ALL THEM BANKERS TO KISS US WHERE THE SUN DON'T SHINE
Mele Kalikimaka is the perfect way to say no Christmas Bonus
no very Merry Christmas Bonus , no very, very, merry, merry Christmas Bonus for youuuuuuuuuu
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