{"id":1165,"date":"2009-04-27T11:56:29","date_gmt":"2009-04-27T19:56:29","guid":{"rendered":"http:\/\/hodakvalue.com\/blog\/?p=1165"},"modified":"2009-05-09T20:02:29","modified_gmt":"2009-05-10T04:02:29","slug":"wall-street-pay-going-back-up-no-matter-how-much-we-wish-otherwise","status":"publish","type":"post","link":"http:\/\/hodakvalue.com\/blog\/wall-street-pay-going-back-up-no-matter-how-much-we-wish-otherwise\/","title":{"rendered":"Wall Street pay going back up, no matter how much we wish otherwise"},"content":{"rendered":"

And partly because we wish it otherwise so much<\/a>.\u00a0 The NYT lead<\/a> is, “The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.\u00a0 Some highlights:<\/p>\n

\u201cI just haven\u2019t seen huge changes in the way people are talking about compensation,\u201d said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. \u201cWall Street is being realistic. You have to retain your human capital.\u201d<\/p><\/blockquote>\n

Gross apparently trades in that human capital, so what he says may be taken with a grain of salt.\u00a0 What does a buyer of human capital have to say?<\/p>\n

\u201cWe need to be able to pay our people,\u201d said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be \u201csensible husbandry.\u201d<\/p><\/blockquote>\n

The press continues to work off of overall reported compensation expense, a very high level, messy number that includes benefits for the secretaries as well as bonuses for the honchos, and everything else compensation related<\/em>.\u00a0\u00a0 This high level number stays fairly constant as a percentage of revenue, but gets regularly misinterpreted<\/a> as a harbinger of top level pay.<\/p>\n

Still, the compensation expense is the only publicly disclosed figure related to pay at the banks, and it is the best figure for calculating pay per worker.<\/p><\/blockquote>\n

And, not a terribly useful one.\u00a0 Using “compensation expense” to discern projected executive bonus levels is like using the “gross revenue” line to predict sales of a small product line.<\/p>\n

To try to blunt criticism of high pay, some banks have introduced reforms to take back bonuses from individual workers whose bets later lose money.<\/p><\/blockquote>\n

Your welcome.\u00a0 That would be our handiwork.\u00a0 Our method has other benefits besides blunting criticism, but, hey, whatever brings the clients to bright.<\/p>\n

Compensation is among the most cited causes of the financial crisis because bonuses were often tied to short-term gains, even if those gains disappeared later on. Still, as profits return, banks do not appear to be changing the absolute level of worker pay \u2014 or the share of revenue dedicated to compensation.<\/p><\/blockquote>\n

Not saying either of these sentences is wrong, but can you see the contradiction in how they were put together?\u00a0 (Not even counting the foolishness of using\u00a0 conjectures about aggregates in order to comment on specific behaviors.)<\/p>\n

But every dollar paid to workers is a dollar that cannot be used to expand the business or increase lending. Some of that revenue, too, could be used by bailed-out banks to pay back taxpayers.<\/p><\/blockquote>\n

…or support PBS, or buy me a Mojito on a Hilton Head beach… And therein is the premise behind the whole article:\u00a0 these dollars are arbitrarily allocated from a fixed pie among various stakeholders, with managers clearly stealing more than their “fair share,” which appears to be $1.<\/p>\n

\u201cThe money should go to shareholders,\u201d said Frederick E. Rowe Jr., a member of the pension board in Texas.<\/p><\/blockquote>\n

…i.e., a shareholder.<\/p>\n

As usual for the bankers, Morgan Stanley’s CFO doesn’t help with this comment:<\/p>\n

\u201cThe number of fat cats making loads of money is much less than you think.\u201d<\/p><\/blockquote>\n

Not that many fat cats?\u00a0 That should calm reader envy just like that.\u00a0 (Mack, put a muzzle on your man, here.)<\/p>\n

Finally, I don’t know how this got into the article.\u00a0 It kind of just pops out of nowhere near the end of the piece, as if the writer was just throwing up the rest of her notes onto the page:<\/p>\n

If shareholders do not like compensation policies at banks, they can simply sell their shares.<\/p><\/blockquote>\n

Interesting.\u00a0 Sell their shares.\u00a0 Hmm.<\/p>\n","protected":false},"excerpt":{"rendered":"

And partly because we wish it otherwise so much.\u00a0 The NYT lead is, “The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.\u00a0 Some highlights: \u201cI just haven\u2019t seen huge changes in the way people are talking about compensation,\u201d said Sandy Gross, managing […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":["post-1165","post","type-post","status-publish","format-standard","hentry","category-reporting-on-pay"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=1165"}],"version-history":[{"count":7,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1165\/revisions"}],"predecessor-version":[{"id":1254,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1165\/revisions\/1254"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=1165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=1165"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=1165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}