[shah269]

http://www.psychologytoday.com/blog/...ng-end-bonuses

Thoughts?

[shah269]

I'm going to have to agree with...
The most common objection to placing limits on banker pay is that societies who do so will see their bankers defect to more lucrative pastures. This isn’t a valid concern. Fields like medicine, science and engineering don’t need to rely on giant bonuses to attract the “best” people; why is banking so different? What’s more, the main problem we should be trying to solve is staving off a collapse of civilization, not preventing an exodus of bankers. Let the bonus-chasing bankers defect, and >>>make room for ones who are more focused on long-term rewards.<<<

[BigDog]

fascinating how the loudest members of the anti-bonus crowd have little idea of how the the bonus system in the banking/prop trading/hedge fund world works....


nearly all industries have a bonus system.... whether you as an individual are in an employment situation where bonuses are given out is a different story....

[KingOfJericho]

Dumb.

I've spent my whole career on Wall St and will tell you that if your shop has a terrible year, you will likely receive a significantly smaller bonus. If you already had that pay locked in the form of a salary, the bank would then have no choice but to lay you off. "Bankers" generate huge returns for their respective firms and are compensated for doing so. What you don't find in the article is that investment banking teams will work 12-16hrs every day and often over weekends. Try getting a DMV employee to do that.

I also love the term "Banker" being thrown around. The financial sector is massive and extends well beyond "banking."

[BigDog]

Originally Posted by KingOfJericho

Dumb.

I've spent my whole career on Wall St and will tell you that if your shop has a terrible year, you will likely receive a significantly smaller bonus. If you already had that pay locked in the form of a salary, the bank would then have no choice but to lay you off.

wholly agreed!

fwiw, bonuses were pretty salty this year across the board esp in HFT...

with the Getco/Knight merger.... probably going to be a good amount of layoffs....
Spot is having issues, Allston is shaking things up, etc etc....

[shah269]

Nearly all industries have a bonus system?
I do?
What's the bonus for engineers?
We didn't export your job to China....or replace you with an H1 visa holder or fire you and hire you back as an independent contractor..so that we can show a reduction in our overhead and get OUR next bonus?

Not hating, just asking.....
But I agree with the article,
Bonus = Taking big risks with other peoples money

[KingOfJericho]

No, Bonus = discreationary pay that can evaporate instantly.

[shah269]

Originally Posted by KingOfJericho

No, Bonus = discreationary pay that can evaporate instantly.

So you are put in a position to take bigger risks to ensure that you do get that bonus...as the article said. So you live year to year and quarter to quarter playing with other peoples incomes to secure yours?

[BigDog]

Originally Posted by shah269

Nearly all industries have a bonus system?
I do?
What's the bonus for engineers?
We didn't export your job to China....or replace you with an H1 visa holder or fire you and hire you back as an independent contractor..so that we can show a reduction in our overhead and get OUR next bonus?

Not hating, just asking.....
But I agree with the article,
Bonus = Taking big risks with other peoples money

Bonus system is NOT taking a risk with other people's money.... in fact you're more often than not taking a risk with your own money.... take for example a software developer.... he can go to a tech firm in say san fran, and work 5 days a week, earning roughly 80-120k or so....

take a software developer in prop trading.... he'll agree to take a base salary of say 40k, rest tied up in bonus.... if the firm has a great year, sure he may walk away with 200k.... if the firm has a bad year..... he'll get his 40k and maybe a pink slip....


most traders work off of draw+bonus..... similar fashion as above, except a draw counts against your bonus....

[KingOfJericho]

Originally Posted by shah269

So you are put in a position to take bigger risks to ensure that you do get that bonus...as the article said. So you live year to year and quarter to quarter playing with other peoples incomes to secure yours?

The article was written by someone with almost zero understanding of the financial industry and you're thinking that the entire industry is Boiler Room.

[shah269]

In 2009 Deutsche Bank awarded an €80 million bonus to Christian Bittar for his contributions to the firm during 2008, the year the crisis hit. The bank had only had time to pay him about €40 million of this amount, however, before deciding in 2011 that it should fire him for his role in manipulating Libor rates prior to and during the crisis.

It’s clear that fixing Libor rates is wrong, and destructive to the financial and larger socio-cultural system. But it’s also clear that if a system offers an €80 million jackpot to anyone who can get away with cheating (or only €40 million if you get caught), then it contains the seeds of its own destruction.

Some might disagree with me by arguing that reform should emphasize punishment over reward. Instead of focusing on reducing or eliminating bonuses for everyone, why not focus on punishing the guilty? Wouldn’t that be fairer? It sounds good, but up to now that system hasn’t worked effectively at all. Producing evidence of wrongdoing by specific bank employees, especially high-level managers, is notoriously difficult.

[MidwestGolfBum]

Given that I give out bonuses at the end of quarters in my business, I agree with the above by KingOfJericho; if somebody didn't do something deserving something extra for putting money in my pocket (or the that of the business, they are the same to me), they get no extra money. A bonus is a wonderful way to entice people to work long hours, for less money originally, in the hopes that they will get a larger payday at the end of all of it.

If people didn't have the incentive of a large payday at the end of things, they wouldn't be working anywhere near as hard or as much as they do now. I know, in my company, we regularly have 8-10 people in the office on a Saturday, and while it is more relaxed there is still work that is getting done on time that a "regular" person wouldn't be doing that work. This goes along with what was said about "try getting somebody from the DMV to do that" there is no way in hell that they would be coming in to work more time than they were supposed to unless there was... wait for it.... an incentive!

[BigDog]

seems like you're more fixated on the fact that he received a solid bonus.... and going by your argument, if there is no bonus system involved, then no wrongdoing would occur....


nonsense

[Maestro]

To BigDog point, I many not understand how Banking and the Investment Industries bonus work. However I have worked for plenty of High tech companies who have all sorts of reward or bonuses plans for their employees. I have participated in most all of them over my career so Yes I like the perks and would not like to see them go away.

However I can say that every company I worked for never paid out the perks at the cost of share holders, employees or its customers. They also do not pay out massive x times the pay bonus to employees included the CEO.

I have no problem with people get reward for doing good or great things, but in banking and investment most time they are not doing good or great things, they just happen to benefit from others success. I know this a simplistic example, but why should a broker get a big bonus because he convince someone to buy Apple stock and then convince them to sell Apple stock when it jump 100 points. They did nothing here Apple employees created the wealth in Apple not some broker convincing some one to buy and sell, or better yet short the stock and create all sort of FUD about the company so they can make more money on the way down.

If these Banking industry felt so strongly about what they were doing then give everyone shares in the company verse cashing them out, no incentive to keep doing well since they know they already got all the cash before the shareholders and such.

Also when companies are in trouble and they bring in new management, if they are really that good do not pay them, give them stock and a $1 pay check. Since they will really hurt if they screw up and the upsides are greater if they are as good as they think.

[KingOfJericho]

Originally Posted by shah269

In 2009 Deutsche Bank awarded an €80 million bonus to Christian Bittar for his contributions to the firm during 2008, the year the crisis hit. The bank had only had time to pay him about €40 million of this amount, however, before deciding in 2011 that it should fire him for his role in manipulating Libor rates prior to and during the crisis.

It’s clear that fixing Libor rates is wrong, and destructive to the financial and larger socio-cultural system. But it’s also clear that if a system offers an €80 million jackpot to anyone who can get away with cheating (or only €40 million if you get caught), then it contains the seeds of its own destruction.

Some might disagree with me by arguing that reform should emphasize punishment over reward. Instead of focusing on reducing or eliminating bonuses for everyone, why not focus on punishing the guilty? Wouldn’t that be fairer? It sounds good, but up to now that system hasn’t worked effectively at all. Producing evidence of wrongdoing by specific bank employees, especially high-level managers, is notoriously difficult.

This is EXACTLY why those who don't know the full story should NEVER attempt to report it. Why didn't you mention any of these relevent facts:

One source close to the matter told us Bittar received a bonus of around $50m for a single year between 2008 and 2010 and that his audited profits totaled €1.7bn over the five year period before he left the bank, while those of his desk totalled €3bn. Jason Kennedy at search firm Kennedy Associates says prop traders at banks are typically paid 12-15% of their profits, suggesting Bittar’s total bonuses over five years could have been as high as €255m ($342m). However, another headhunter who declined to be named suggested a 5% cut of the profits would have been more realistic, putting Bittar’s earnings in the region of €85m ($120m).

http://news.efinancialcareers.com/13...300m-in-total/

[shah269]

Well how much does a DMV person get paid?
You do get what you pay for.
I mean that's like saying "Well that bottom shelf martini tasted horrible....I'm never drinking martinis ever again!"
You get what you pay for.

And for the record…god I hope my doctor is not on a bonus system…”Of if I get him to take 5 more pills a day….I’ll be able to afford that new 911 I wanted! But if he doesn’t take those 5 extra pills a day I’m stuck with my Audi.”

[MidwestGolfBum]

There are certainly incentives for docs to push certain meds, procedures, etc. so in effect, yes, they are on a bonus system.

[KingOfJericho]

Originally Posted by MidwestGolfBum

There are certainly incentives for docs to push certain meds, procedures, etc. so in effect, yes, they are on a bonus system.

This. Most hospitals are also corporations with doctors as their CEOs. Do you think they're not getting bonuses based on the profitability of their facility?

[BigDog]

Originally Posted by shah269

Well how much does a DMV person get paid?
You do get what you pay for.
I mean that's like saying "Well that bottom shelf martini tasted horrible....I'm never drinking martinis ever again!"
You get what you pay for.

And for the record…god I hope my doctor is not on a bonus system…”Of if I get him to take 5 more pills a day….I’ll be able to afford that new 911 I wanted! But if he doesn’t take those 5 extra pills a day I’m stuck with my Audi.”

what do you think medical sales people do?

[shah269]

Originally Posted by MidwestGolfBum

There are certainly incentives for docs to push certain meds, procedures, etc. so in effect, yes, they are on a bonus system.

Didn't we just pass some laws about that!?
And god i hope my dentist doesn't have a bonus structure...
"OK if i pull out 5 teeth I get a new boat! But if his teeth look ok..then well I'll have to just live with the 5 year old boat."

Yeah thanks, ok...if you do good and really do create VALUE then ok....here is some cash.

Doctor "Shah found a little cavity way in the back that would have been an issue in 5 years, fixed it for you now so in 5 years you will be ok"

Shah "Bro you rock! Here is $100!"

My money, my little 401k is just as valuable at my teeth...please please please don't fucking take any risks with it! And don't make your self rich based on those risks!

[BigDog]

Originally Posted by shah269

Didn't we just pass some laws about that!?
And god i hope my dentist doesn't have a bonus structure...
"OK if i pull out 5 teeth I get a new boat! But if his teeth look ok..then well I'll have to just live with the 5 year old boat."

Yeah thanks, ok...if you do good and really do create VALUE then ok....here is some cash.

Doctor "Shah found a little cavity way in the back that would have been an issue in 5 years, fixed it for you now so in 5 years you will be ok"

Shah "Bro you rock! Here is $100!"

My money, my little 401k is just as valuable at my teeth...please please please don't fucking take any risks with it! And don't make your self rich based on those risks!

You do realize your 401k is affected much more by the risks YOU decide to take, not what someone else is taking....

[KingOfJericho]

Originally Posted by shah269

My money, my little 401k is just as valuable at my teeth...please please please don't fucking take any risks with it! And don't make your self rich based on those risks!

You control your own 401k allocations.