We want pay for performance, but not really

Posted by Marc Hodak on November 4, 2009 under Reporting on pay | Be the First to Comment

Articles are starting to prepare us for a horrible truth:  many Wall Street bankers are going to get (gasp) big bonuses this year!

Incentive pay on Wall Street is set to rise by about 40% as stronger financial markets collide with the political backlash over bonuses, according to a closely watched survey set to be released Thursday.

Clearly, the backlash is as expected as the bonuses.

Whatever the actual numbers, the bonuses — most of which will be calculated between now and the end of the year and paid out in early 2009 — are bound to be controversial given the hard economic times many Americans are facing and the resentment directed at the financial industry.

After all the talk about pay for performance, you’d think that we would recognize and accept the fact that some bankers have performed perfectly well this year, and therefore should be paid what well-performing bankers can get.  But the fact that such bonuses are still grabbing headlines reveals that the underlying controversy is not about big pay for good performance–it’s a about big pay, period.  The story is not really one about greed; it’s about envy.  It’s about the idea that no one should make that much more than I do, dammit.

I really like the Santa drawing accompanying the WSJ article, as if the bankers lined up for their bonuses are getting a gift from a generous Mr. Claus, instead of getting as little as their embarrassed, profit-seeking firms could get away with paying them without losing them.