Mar
27
People Have Spoken: No Performance Based Pay
March 27, 2009 | Comments Off
Today, Bank of America (BAC) announced that they will increase their top level investment bankers salaries by up to 70%. In their own words: “The concepts we are considering would not increase total compensation, Rather, we believe it is responsible, and consistent with the emerging public consensus, that a greater percentage of overall compensation come from fixed base salary.” – Brian Moynihan said from Bank of America.
What he really meant was (yes, I am reading his mind now):
- Top talent has to be motivated by compensation – in the $250,000 to $500,000 range or upwards. CEO’s friend’s kind of talent will also be well paid (regardless). Regular talent can have ‘normal’ salaries and no bonuses.
- If government want to steal/extort/tax at 90% of the top talent bonuses, then we don’t give them bonuses. We obey the law to its fullest.
- Retention and performance bonuses are not well perceived by the people of the USA – they like fixed salaries regardless of how good or bad the work has been done. So we will have to give big salaries and (hopefully) fire those that under perform.
In the end, an angry, ignorant mob, led by populist/socialist leaders has accomplished nothing. No reform in terms of ammount, or performance-ties of the bonuses. They just institutionalized paying big salaries to the big dogs at investment banks. And they created a lot of paperwork in the process.
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