Big Bonuses

[Dr. Shane]

A guy was on the radio today. His wife works on Wall Street. He explained that 10 years ago she hit her salary cap and hasn't gotten a raise since. However her bonuses continue to increase. 2/3 of her take-home pay comes from bonuses.

Fact is that stopping the bonuses on Wall Street will have the same effect as laying off thousands of workers. People will lose their homes. Cars will be reposed. Children will be pulled out of private schools. The economy will be negatively impacted just as if a local factory had been shut down.

Why? Because of the politics of class envy. Because the Tenth Commandment is not fashionable.

[SouthAfrican]

Not to criticize or the such - but in my experience (keep in mind we live in South Africa) ...

When fuel, food and the such started to get more expensive, my salary wasn't increased at all. For this reason we decided to cut out unnecessary expenses, such as the credit card (and other shopping accounts where you can buy on credit) and do only cash purchases.

Granted, we also have to change our lifestyle to suit our income, but today we are better off with our income and NO debt than it would've been should my salary be increased to keep track with inflation and more debt as well.

This also forced us to be more selective in what we eat - more healthier foods, for example.

Recently, a local satellite TV company (MultiChoice) decided to increase their tariffs. People moaned about that, but when I challenged them to choose between ditching Multichoice and having less debt, or staying with Multichoice and making more debt, most chose the latter. Not surprising, as they want to watch their favourite sports (rugby, golf etc).

[Neil D]

A guy was on the radio today. His wife works on Wall Street. He explained that 10 years ago she hit her salary cap and hasn't gotten a raise since. However her bonuses continue to increase. 2/3 of her take-home pay comes from bonuses.

[Key Guy]

I think this is appropriate here...

From: http://waldo.villagesoup.com/Blogs/story.cfm?storyID=151357

Title: Senatorial Ethics: An Insider’s View

By Dr. Rushworth M. Kidder

ROCKLAND (March 24): Last week’s revelations about bonuses paid to AIG executives raised numerous questions. For some voters, they were questions about money and finance. For others, they were about law and regulation. But for Barry C. Black, “the issue of Wall Street versus Main Street” is an “important ethical issue,” causing lawmakers to ask, What’s right?

As chaplain of the U.S. Senate, Dr. Black sees his role as “spiritual fitness advisor and ethical coach” to senators. What he’s seen convinces him that the broadest questions facing the future direction of the nation are rarely matters of right versus wrong. Instead, they bring to bear powerful moral arguments on both sides. While partisans may see them in stark right-versus-wrong terms, Black says that by the time such issues “reach the Senate chamber, they are nuanced — they are definitely right-versus-right conundrums.”

A retired rear admiral and former chief of Navy chaplains, Black is the first black American, the first military chaplain, and the first Seventh-day Adventist to hold this position, which was established in 1789. His is not a political post: His five years in the chaplain’s vault-ceilinged, fireplaced, and book-lined office in the Capitol already have spanned a change in parties. So in discussing senatorial decision making during a telephone conversation last month with members of our Institute, he maintained a thoughtfully nonpartisan stance.

No doubt as a result, there’s hardly a moral issue that the senators haven’t discussed with him, including abortion, stem-cell research, gay marriage, Terry Shiavo and the right to life, the question of just or unjust wars, the public expression of sectarian views — and now, of course, the economic stimulus package. One of his tasks, as he sees it, is to help senators “look through ethical lenses” in order to “enable each lawmaker, after voting, to at least be able to explain to the press why he or she voted that way, and give ethical reasons for the vote.”

Sometimes, he says, senators invite his help and counsel on particular topics. Sometimes they attend his weekly prayer breakfasts. Sometimes they visit the Bible study sessions he conducts five times a week. And sometimes they seek him out in his office in more private ways — “you know,” he chuckles, “‘Oh, Chaplain, I was just passing by!’” — and end up coming in for an hour of conversation.

But the core question is always the same: What’s the right thing to do?

While Black sees “a tremendous amount of faith on Capitol Hill,” he’s not blind to the temptations senators face. As humans, he says, we sometimes “tend to move toward the darker angels of our nature” and “avoid the ethical narrow road.” Politicians in particular, he says, can get caught up all too easily in “the things that accompany power.” When “you start believing the news clippings, you start believing the accolades,” he explains, it sometimes becomes “easier to see the ethical lapses of others than your own.”

I asked Black how he himself negotiates the fine line between helping others find their own way and simply telling them what he thinks they should do — especially when the vote on which they may be seeking guidance could have what he calls “incredibly challenging and negative unintended consequences” if his advice were wrong.

“I find if you are not doctrinaire and dogmatic,” he says, “and if you delay providing your perspective until you are certain that the individual has used some of his or her creative juices, then by the time you get around to making some suggestions or observations, you are pretty much helping an individual solidify a position that he or she is already leaning toward.”

In his ethics training work, he explains, he helps the participants understand that different ethical perspectives — all of which are “right” — can produce very different conclusions. But “by encouraging them to do their own thinking, and to arrive at their own conclusions using certain ethical constructs as a springboard for their reflection, inevitably it’s not going to be my decision. It’s going to be theirs.”

That, to my mind, is a singularly important lesson these days. Given the explosion of polarizing opinions made possible by a pop culture of ubiquitous blogging and anonymous call-in shows, it can take true moral courage to formulate a position slowly and carefully. Where blaring self-assertion so often rides roughshod over judicious reasoning, the very act of stepping outside without an opinion sometimes feels like standing naked in a hailstorm. Yet if Black is right — if the toughest issues facing our global future have powerful moral arguments supporting each side — the best counseling will not be to tell people what to think. It will be to teach them how to think.

Which, I suspect, is why Black is so effective. If even a fraction of those serving in Congress are willing to factor ethics into their decision making — and if people like Black are there to help them along — that very fact may be a strong leading indicator pointing the way out of the financial crisis. It may not end the outrage expressed last week by a frustrated nation. But it certainly offers hope that, at the highest levels of government, the bedrock moral causes of the current ethics recession can be addressed.

[phkrause]

Nice post keyguy. Black is a very interesting person.

pk

[Dr. Shane]

Bonuses are used as incentives so the answer cannot be to replace bonuses with higher salaries. If that worked it would have been done a long time ago. It doesn't work. When it id tried it leads to less efficiency. That is just human nature. The answer is to let people get bonuses that earn them. If their department is profitable they should get their bonus. Other people shouldn't turn so green with envy.

[Neil D]

Not necessarily....In the financial culture, a 60 hour week leaves little time for home and family.

What you are talking about is a culture, Shane....and it needs to be a bit more family friendly...which may lead to more inefficency...but family life might be abit better...

[carolaa]

Other people shouldn't turn so green with envy.

It's not envy, Shane. It's the audacity of taxpayer money paying for those bonuses that are more than most of us make in years or an entire career! Why should I subsidize someone else's extravagant lifestyle? If a company can't pay the bonuses, it is not my problem. Let them restructure or find some way to do it, or not. I'm not saying they do or don't deserve the bonuses, but it should not be up to the taxpayers to pay them.

[SouthAfrican]

As chaplain of the U.S. Senate, Dr. Black sees his role as “spiritual fitness advisor and ethical coach” to senators. What he’s seen convinces him that the broadest questions facing the future direction of the nation are rarely matters of right versus wrong. Instead, they bring to bear powerful moral arguments on both sides. While partisans may see them in stark right-versus-wrong terms, Black says that by the time such issues “reach the Senate chamber, they are nuanced — they are definitely right-versus-right conundrums.”

[phkrause]

Excellent posts Carolaa and SouthAfrican. Even in your post Shane you mention that bonuses are for those that earn them. But these people did not earn them, they brought there company down. And I don't think any one disagrees that bonuses can't replace higher salaries. I can remember when I worked for the Faith For Today, every year they we would get evaluated on the previous year and get a raise based on that evaluation. Also when working for the College Press they had 2 evaluations per year, every 6 months, and once a year they gave us a cost of living increase. All these were incentive enough. Because we knew, or at least I did, that if we/I did the job we would get an increase in pay. Like it says in the Bible "do all things to the Glory of God". Talk about not getting a raise. The last company I worked for, I had not gotten a raise there since 1994, that's about 14 years, but yet I stayed did my work without ever complaining, as my cost of living kept going up, and than for all my honest work and dedication (working on holidays, when they just had to get a job out; have also worked on New Year's and Christmas, etc). I get laid off. I worked at this place not because management was so great or whatever, I stayed because I loved the people I worked with and most important to me was showing myself approved of God, that's who I work for. I don't need bonuses to work for anybody, and I definitely don't covet anybody's money. What I can't stand is people having to have bonuses when they already made half a million a year, need incentive's to do the job that they supposedly love, or there company isn't even profitable. That's what bothers me about these stupid bonses, and now we the tax payer are actually paying them! Sorry but that's my 5 cents.

pk

[SouthAfrican]

Excellent posts Carolaa and SouthAfrican. Even in your post Shane you mention that bonuses are for those that earn them. But these people did not earn them, they brought there company down. And I don't think any one disagrees that bonuses can't replace higher salaries. I can remember when I worked for the Faith For Today, every year they we would get evaluated on the previous year and get a raise based on that evaluation. Also when working for the College Press they had 2 evaluations per year, every 6 months, and once a year they gave us a cost of living increase. All these were incentive enough. Because we knew, or at least I did, that if we/I did the job we would get an increase in pay. Like it says in the Bible "do all things to the Glory of God". Talk about not getting a raise. The last company I worked for, I had not gotten a raise there since 1994, that's about 14 years, but yet I stayed did my work without ever complaining, as my cost of living kept going up, and than for all my honest work and dedication (working on holidays, when they just had to get a job out; have also worked on New Year's and Christmas, etc). I get laid off. I worked at this place not because management was so great or whatever, I stayed because I loved the people I worked with and most important to me was showing myself approved of God, that's who I work for. I don't need bonuses to work for anybody, and I definitely don't covet anybody's money. What I can't stand is people having to have bonuses when they already made half a million a year, need incentive's to do the job that they supposedly love, or there company isn't even profitable. That's what bothers me about these stupid bonses, and now we the tax payer are actually paying them! Sorry but that's my 5 cents.

pk

This brings to mind the following :

Mat 6:24 No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.

[phkrause]

pk

[Gerr]

Quote:

Why? Because of the politics of class envy. Because the Tenth Commandment is not fashionable.

Hmmmmmm. Still on the class envy high horse Shane? I think you are confusing genuine disgust for the greed of Wall St. as class envy.

Bonus is fine when you and your company are doing well. NOBODY has any problem with that. But NOT when your company is drowning in RED ink and you help get it there!

Or should we start giving bonuses to hospitals and doctors for keeping people sick? Or bonuses for killing them?

[SouthAfrican]

Quote:

Why? Because of the politics of class envy. Because the Tenth Commandment is not fashionable.

Hmmmmmm. Still on the class envy high horse Shane? I think you are confusing genuine disgust for the greed of Wall St. as class envy.

Bonus is fine when you and your company are doing well. NOBODY has any problem with that. But NOT when your company is drowning in RED ink and you help get it there!

Or should we start giving bonuses to hospitals and doctors for keeping people sick? Or bonuses for killing them?

Put another way - suppose your neighbour have a huge house, the best food, a butler, four big cars (which's still being paid off), garden services, cable television, the whole lot. Now Mr Neighbour's work decided to cut their salaries, and now Mr Neighbour can't afford to pay it all, and he asks you to help him financially - but he is NOT willing to sell off his possessions (or terminate any services) to lower his expenses.

What will you do?

[there buster]

Quote:

Bonus is fine when you and your company are doing well. NOBODY has any problem with that. But NOT when your company is drowning in RED ink and you help get it there!

Or should we start giving bonuses to hospitals and doctors for keeping people sick? Or bonuses for killing them?

You're mistaken. The employees at AIG who put the company in difficulty have been fired. The bonuses were retention bonuses for workers from other divisions, some of whom were working for an annual salary of $1.00 (See yesterday's WSJ). The bonuses were their entire compensation for staying by and doing the hard work.

As for bonuses, how do you feel about a bailed-out company paying #337,500,000.00 of taxpayer money in bonuses for people to stop working?

[lazarus]

Quote:

Why? Because of the politics of class envy. Because the Tenth Commandment is not fashionable.

Hmmmmmm. Still on the class envy high horse Shane? I think you are confusing genuine disgust for the greed of Wall St. as class envy.

Bonus is fine when you and your company are doing well. NOBODY has any problem with that. But NOT when your company is drowning in RED ink and you help get it there!

Or should we start giving bonuses to hospitals and doctors for keeping people sick? Or bonuses for killing them?

It is as bad as you think and you are not mistaken

The New York Post named three people who got the AIG bonuses and all three live in Connecticut.

The Post identified Fairfield residents James Haas and Douglas Poling and New Canaan resident Jonathan Liebergall and said they received the cash after AIG was given bailout money by the federal government.

The three men are among 418 current and former AIG employees who received bonuses, the Wall Street Journal reports. All three worked in the company's troubled Financial Products division in Wilton, which has been linked to the company's collapse, the New York Post reports.

Edward Liddy, AIG's CEO, testified before Congress Wednesday and said he told some of the employees who received checks of $100,00 or more to return their bonus payments.

According to Liddy, some have given back all of their bonuses. One is Polling, 48, who served as the financial unit's general counsel, director, executive vice-president and chief administrative officer, according to the Wall Street Journal reports.

He received more that $6.4 million and plans to return it, the Wall Street Journal reports.

Haas, 47, served as executive vice-president and the co-leader of North American marketing.

In fact some who were at the heart of the troubles at AIG received the biggest bonuses.

[carolaa]

The guy who resigned on the front page of whatever (I forget) newspaper was also from the FP division.

[carolaa]

That's probably the biggest motivator for most of us, else we wouldn't probably be there. But some people think their job is so fun they'd *almost* do it for no pay. And some people are motivated by things other than money - positive strokes or recognition, a feeling that they've contributed, it fulfills their passion, etc.

[there buster]

Quote:

The guy who resigned on the front page of whatever (I forget) newspaper was also from the FP division.

Read it again. He had been with the commodities division, which had been profitable. He was transferred to FP because the people who had gotten it into trouble had been let go. He was coming in to clean up the mess, on a salary of $1.00/year, with the bonus as a way of getting him to stay and do the dirty work. Like any sane person, he would rather have left for another company--something many did--but out of a sense of responsibility he stayed, after getting repeated assurances that the company would honor its agreement. Then Barney Frank and others pulled this stupid stunt actually punishing the people trying to make the money to pay back the bailout!

As Mark Twain said, "A lie can go around the world three times before the truth puts its boots on." The Democrats depend on that.

This kind of mob mentality is how the world ends. I DO NOT say this is the end of the world. But when it comes, this sort of rabble-rousing by politicians, rather than responsible discourse, is what will bring all manner of evil. And those who emote rather than think are their tools.

[carolaa]

If this is true, then the CEOs should have laid that all out when they were being grilled by Congress.

[phkrause]

I have to agree with you carolaa. The problem I'm finding with all this mess, is it seems every story that gets written, showed, or told has either something different, new, or completely opposite of what originally was out there. I don't think we'II ever get the whole picture in its entirety. Or without some spin to whatever somebody wants people to believe!

pk

[Dr. Shane]

Quote:

It's not envy, Shane.

Oh, no?

Quote:

It's... those bonuses that are more than most of us make in years or an entire career!

Glad we are clear on that.

[Dr. Shane]

Quote:

Even in your post Shane you mention that bonuses are for those that earn them. But these people did not earn them, they brought there company down.

I do not believe that is correct. Those receiving bonuses worked in departments that were profitable. I am not aware that any working in the sub-prime department (the one that brought the company down) are getting bonuses. I certainly wouldn't support that.

[Dr. Shane]

Quote:

What I can't stand is people having to have bonuses when they already made half a million a year

No envy there.

[Dr. Shane]

Put another way - suppose your neighbor have a huge house, the best food, a butler, four big cars (which's still being paid off), garden services, cable television, the whole lot. Now Mr Neighbor's work decided to cut their salaries, and now Mr Neighbor can't afford to pay it all...

Yes consider this.

Mr. Neighbor's house is foreclosed on which becomes a toxic asset for a bank because he is upside-down in his mortgage.

Mr. Neighbor's four big cars are repossessed and the car company or bank cannot sell them for what Mr. Neighbor owes.

Mr. Neighbor lays off his gardener so Mr. Gardener joins the unemployment line.

Mr. Neighbor cuts his cable service so the cable company lays off an employee.

Mr. Neighbor lays off his butler so Mr. Butler joins the unemployment line.

But we can all be happy that Mr. Neighbor didn't get his bonus. Why does he need a bonus when he already makes a 1/2 million dollars?