2009 Goldman Sachs bonus: $700,000/employee

[Andy Nguyen]

Bonuses Put Goldman in Public Relations Bind

By GRAHAM BOWLEY
A celebrated Goldman Sachs partner, Gus Levy, coined the maxim that long defined the bank, the savviest and most influential firm on Wall Street: “Greedy, but long-term greedy.”

But these days that old dictum is being truncated to just “greedy” by some Goldman critics. While many ordinary Americans are still waiting for an economic recovery, Goldman and its employees are enjoying one of the richest periods in the bank’s 140-year history.

Goldman executives are perplexed by the resentment directed at their bank and contend the criticism is unjustified. But they find themselves in the uncomfortable position of defending Goldman’s blowout profits and the outsize paydays that are the hallmark of its success.

For Goldman employees, it is almost as if the financial crisis never happened. Only months after paying back billions of taxpayer dollars, Goldman Sachs is on pace to pay annual bonuses that will rival the record payouts that it made in 2007, at the height of the bubble. In the last nine months, the bank set aside about $16.7 billion for compensation — on track to pay each of its 31,700 employees close to $700,000 this year. Top producers are expecting multimillion-dollar paydays.

The latest tally came Thursday, when Goldman reported another set of robust results. But its strong financial showing — a profit of $3.19 billion in the third quarter — was overshadowed by Goldman’s swelling bonus pool. Goldman set aside nearly half of its revenue to reward its employees, a common practice on Wall Street, even in this post-bailout era.

But despite Goldman’s success or, perhaps, because of it, the bank has come to symbolize for many a return to wanton Wall Street excess. Even in 2008, the most tumultuous year in modern Wall Street history, Goldman employees reaped rewards that most people can only dream about. Goldman paid out $4.82 billion in bonuses last year, awarding 953 employees at least $1 million each and 78 executives $5 million or more. The rewards for 2009 will be far greater.

Goldman executives know they have a public opinion problem, and they are trying to figure out what to do about it — as long as it does not involve actually cutting pay.

Lloyd C. Blankfein, Goldman’s chairman and chief executive, finds himself in the unusual position of defending a successful company in a nation that normally celebrates success.

Goldman said Thursday that it would donate $200 million to its charitable foundation (that figure represents 6 percent of its third-quarter profit, or about six days of earnings).

Rumors are swirling on Wall Street that Goldman might donate even more money to charity, perhaps as much as $1 billion, in an effort to defuse public resentment directed at the bank. Mr. Blankfein has even urged his free-spending bankers to be mindful of conspicuous consumption.

Goldman is also weighing changes to some of its compensation practices. Its executives receive a significant portion of their total compensation in stock. But like other banks, it is considering increasing that portion for all employees, giving deferred payments and introducing provisions that would enable the bank to claw back bonuses if trades go wrong.

Mr. Blankfein laid out such ideas in a speech in Germany last month that drew wide attention on Wall Street.

Despite the news of Goldman’s strong quarter, David A. Viniar, the chief financial officer, was on the defensive Thursday. Talk of bonuses, and whether they were justified, dominated what in another era might have been a celebratory call with the media.

“We are very focused on what is going on in the world,” Mr. Viniar replied to a barrage of questions about whether the bank should pay outsize bonuses in these hard economic times. “We are focused on the economic climate. We are focused on what is going on with other people.”

But he said Goldman had a duty to its employees and to retain staff. By paying big bonuses, he said, the bank was trying to make a difficult trade-off between “being fair to our people who have done a remarkable job” and “what’s going on in the world.”

Goldman, Mr. Viniar said, was being unfairly singled out over its bonus culture. “Yes, I think that is too big a focus,” he said. “I would prefer people to be focused on the success of our business, how well we’re doing, and how well our people are performing.”

Still, some outsiders wonder if Goldman, which is so adept at reading the markets, is misreading public opinion, and whether the gilded Goldman name will be tarnished by this episode.

Goldman is no different from most Wall Street firms: it rewards bankers and traders who make lots of money.

“They do it because they can,” Michael Useem, professor of management at the Wharton School at the University of Pennsylvania, said of the bonuses. “But strategic thinking requires that you think not only about trading but also about reputation and where the bank stands in the court of public opinion.”

This much is indisputable: Goldman Sachs is minting money. Its third-quarter profits were powered in large part by aggressive trading in the fixed income and equity markets.

Its earnings were also bolstered by mark-ups in its own private equity stakes and other corporate investments, which have risen as markets have rallied this year. Its earnings from investment banking were down from the second quarter, it said, because of the seasonally weak summer months and because the second quarter had been enhanced by underwriting business as other banks had rushed to raise capital.

While Goldman has been a vocal proponent of reforming pay practices, the bank has not yet shown its hand and will only describe any major changes in its compensation structure when it announces final bonuses at the end of this year. Meanwhile, other banks, like Morgan Stanley, have moved ahead in reform, by introducing three-year clawback provisions, for example.

Brian Foley, a compensation consultant in White Plains, said of the possible reforms like delayed payments and clawback provisions: “I definitely think they ought to be doing it, and I assume they will be doing it. They have got to arrange the chairs on the deck so things look different.”

Bonuses Put Goldman in Public Relations Bind - NYTimes.com

[Yan He]

If you listen to the the earnings conference yesterday, the speaker, David was really annoyed by questions regarding the compensation. They did a nice job this year so far and the hardworking employees deserve it. (I know too many people would disagree here )

[GoIllini]

Blankenfein would do well to require that a certain percentage of the bonuses being paid out- assuming an employee is receiving more than he did in 2007- go to a 501c(3) of the recipient's choice. They're the smartest firm on the street by a number of measures and they deserve every penny, but the firm would do well to demonstrate a little bit of modesty during a recession- if only for the sake of not angering the politicians.

"With great wisdom and success comes great humility."

[alain]

Blankenfein would do well to require that a certain percentage of the bonuses being paid out- assuming an employee is receiving more than he did in 2007- go to a 501c(3) of the recipient's choice. They're the smartest firm on the street by a number of measures and they deserve every penny, but the firm would do well to demonstrate a little bit of modesty during a recession- if only for the sake of not angering the politicians.

Why? If they earn it, they deserve it. I read somewhere GS was one of the biggest donors to political campaigns so I don't think they will care what the politicians say.

[Katrina]

Money is coming back to wall Street with Goldman leading the way ! Another year or two the bonuses on wall street with go back to 2006-2007 level.

[Eugene Krel]

That is until Washington says that people who got them have to pay them back.

[GoIllini]

Originally Posted by alain Why? If they earn it, they deserve it. I read somewhere GS was one of the biggest donors to political campaigns so I don't think they will care what the politicians say.

Yes, but at the end of the day, the politicians- particularly the Dems who are running the show- realize that the most powerful political force in the country is 200 million angry voters. Maybe I'm the only one on these forums who grew up in ordinary America, but to me it looks incredibly arrogant to pay out all of this money without any acknowledgment of what is going on in the rest of the country and world.

You don't eat in front of hungry people until everybody at the table has been served. You don't talk about your new yacht at the homeless shelter. And you don't hand out the biggest bonuses in your company's history without paying at least some heed to the problems going on in the rest of the country.

That is until Washington says that people who got them have to pay them back.

Exactly my point. Rightly or wrongly, Goldman can do this the easy way or the hard way. They can either try to distract from the big bonuses by making the biggest charitable donation in corporate history, or they can act with hubris this year and let Congress tax compensation from financial firms at 70% next year.

[chaoticrambler]

I agree with GoIllini's thoughts.

[Eugene Krel]

Originally Posted by GoIllini Exactly my point. Rightly or wrongly, Goldman can do this the easy way or the hard way. They can either try to distract from the big bonuses by making the biggest charitable donation in corporate history, or they can act with hubris this year and let Congress tax compensation from financial firms at 70% next year.

My post was more of a shot at the fact that Washington is able to dictate executive compensation. Although, I am ok with it as long as only companies that are still quasi-government owned are affected.

[IlyaKEightSix]

It seems GS is in a catch-22.

If you do poorly and blow up, the populists call for your head like they do with Dick Fuld, and get angry at you for taking in so many taxpayer dollars into the black hole that is your failing firm (AIG).

But if you're highly successful, pay back every single penny given to you b y Uncle Sam with 11% interest and then start making a killing again, suddenly, you're evil also!

It seems that it doesn't matter whether or not firms on Wall Street are failures or successes. So long as they're in the spotlight, people hate them.

It seems to me that GS right now is like the 2007 Patriots in the NFL. Everybody hated them because they were running it up. Everyone also hates the Oakland Raiders because they simply suck. So in order to be the good guy in the public eye, what is it that you have to do?

[GoIllini]

Originally Posted by IlyaKEightSix It seems GS is in a catch-22. If you do poorly and blow up, the populists call for your head like they do with Dick Fuld, and get angry at you for taking in so many taxpayer dollars into the black hole that is your failing firm (AIG).

Actually, a lot of people feel bad for the Lehmanites, for the record. Unlike a lot of other firms, they died with the traditional (in)dignity of a Chapter 11.

But if you're highly successful, pay back every single penny given to you b y Uncle Sam with 11% interest and then start making a killing again, suddenly, you're evil also!

I'm not complaining about that. I'm saying that Blankenfein may be smart, but he doesn't seem all that wise. A certain firm needs to reread the story of Icarus and Daedalus.

It seems that it doesn't matter whether or not firms on Wall Street are failures or successes. So long as they're in the spotlight, people hate them.

Class envy tends to increase during a recession. Goldman isn't helping the situation.

It seems to me that GS right now is like the 2007 Patriots in the NFL. Everybody hated them because they were running it up. Everyone also hates the Oakland Raiders because they simply suck. So in order to be the good guy in the public eye, what is it that you have to do?

They should show a little less hubris. The public doesn't hate you because you're successful; they hate you because they think you gloat about it.

[alain]

Originally Posted by IlyaKEightSix and get angry at you for taking in so many taxpayer dollars into the black hole that is your failing firm (AIG).

I'm angry too. It's all our money going to save failing enterprises. As I said before, they should be left to die. Those how markets work. Inefficiencies are filtered out.

Originally Posted by IlyaKEightSix But if you're highly successful, pay back every single penny given to you b y Uncle Sam with 11% interest and then start making a killing again, suddenly, you're evil also!

No, no. If uncle Sam gives you money and you decide to risk it, that's a problem. That's my beef with GS. It doesn't matter if you are successful or not at managing it. It could go both ways.

[IlyaKEightSix]

But GS paid back Uncle Sam's money.

With interest, also!

Furthermore, I don't see how the Goldmanites are undeserving, or gloating. They made a big profit; they got a big bonus. People see said bonus and cry foul. It's not like a guy walks into a store and says "I'm from Goldman Sachs, gimme X, Y, and Z". He comes into a store, and spends money like anybody else.

I honestly think it's a matter of envy and jealousy right now. And me myself, I sort of feel envious as well. I'd like $700,000 also. But as much as I wish I could do that well, I don't begrudge those at GS for doing so well.

[Eugene Krel]

Yay Goldman

Op-Ed Columnist - Goldman Can Spare You a Dime - NYTimes.com

[Stefan Zota]

Originally Posted by alain If uncle Sam gives you money and you decide to risk it, that's a problem. That's my beef with GS. It doesn't matter if you are successful or not at managing it. It could go both ways.

This is business, "Uncle Sam" does not own GS so they cannot impose direct trading restrictions. They can ask for liquidity margins, but at the moment they cannot say: at the structured products desk you need to reduce your overall leverage ratio 30->25.
Same logic applies to all the other banks that have re-paid TARP funds.

I agree with you that GS as well as other banks profited from public assistance so there is a moral debt. No question about it. However, the bailout decision had a public factor too. If GS or the others would have gone down, perhaps regular tax-payer would have lost much more, perhaps 20% employment ratio, perhaps no credit flow, perhaps, perhaps ...

In my opinion, there is a delicate balance between the contribution of such companies to overall financial stability and their business independence ...

[GoIllini]

Originally Posted by IlyaKEightSix But GS paid back Uncle Sam's money. With interest, also! Furthermore, I don't see how the Goldmanites are undeserving, or gloating. They made a big profit; they got a big bonus. People see said bonus and cry foul. It's not like a guy walks into a store and says "I'm from Goldman Sachs, gimme X, Y, and Z". He comes into a store, and spends money like anybody else.

Well, handing out the equivalent of 600,000 peoples' annual wages to 30,000 people is a kind of event that attracts a fair amount of attention. Unlike 20 years ago, Wall Street bonuses are now a media event.

I honestly think it's a matter of envy and jealousy right now. And me myself, I sort of feel envious as well. I'd like $700,000 also. But as much as I wish I could do that well, I don't begrudge those at GS for doing so well.

It absolutely is, but here's the thing; that envy is a perfectly natural human reaction- and may not be anywhere near as unhealthy as the laissez-faire capitalists make it out to be. We also envy people who are eating when we're hungry and people at a homeless shelter envy rich people who talk about their yachts.

The couthe thing to do is not to hand out excess in front of hungry people. Given that bonuses are now a media event and half the country is hungry, the polite thing to do is willingly "share" a little of their food with other guests at the table by having the bonus recipients give a percentage to 501(c)3s.

GS can hand out huge bonuses when other people in the economy aren't suffering. Until then, however, they should keep a lower profile- for everyone's sake.

[IlyaKEightSix]

I believe that article "Goldman, can you spare a dime" stated that Goldman was donating $200 million to their foundation for education.

However, what Standard Oil and Mr. Rockefeller didn't have to contend with was the mainstream media. Imagine if this was happening today.

"Rockefeller rakes in $1,000,000 profit! Oil prices rise again!" or something else like that.

The absence of the MSM was the reason that Britain was able to torch Dresden and Hamburg in WW2, and why the U.S. was able to nuke Japan--twice.

Frankly, I think the mainstream media does more harm than good, exaggerating so many different events, jumping on any sensationalist story it can (for instance, since I live in the Philadelphia area, if you turn on the local news, every day or every other day, there's a report about some sort of murder...or at least there was).

As for your analogy, GoIllini, I don't believe it's a matter of Goldman handing out excess in front of hungry people.

I simply believe there are a lot of hungry people, but the media has its eyes in the house of Goldman and is saying "look at all of the excess that everyone at Goldman is getting!".

I don't think it's a case of Goldmanites parading up and down and saying how great they are and making a big pomp over their payday, so much as their payday is getting far more attention than it would have gotten a hundred years ago due to the spread of information.

[GoIllini]

I believe that article "Goldman, can you spare a dime" stated that Goldman was donating $200 million to their foundation for education.

1.2% of the bonuses; roughly the average contribution to charity for a fortune 500 company as a percentage of its profits.

Originally Posted by IlyaKEightSix The absence of the MSM was the reason that Britain was able to torch Dresden and Hamburg in WW2, and why the U.S. was able to nuke Japan--twice.

DING DING DING.

The MSM is not an evil system bent on undermining the US; it is a system that encourages social behavior.

As for your analogy, GoIllini, I don't believe it's a matter of Goldman handing out excess in front of hungry people.

Then who are they handing out this excess in front of? Because obviously they're in the MSM's limelight right now. I wouldn't be saying they needed to mandate a 10-20% charitable donation if this were getting handed out in a normal economic environment, but we're still in a recession.

I simply believe there are a lot of hungry people, but the media has its eyes in the house of Goldman and is saying "look at all of the excess that everyone at Goldman is getting!".

Well, yes. Goldman is earning $700K/employee, which is probably going to be quadruple the average of any fortune-500 company outside of finance.

I don't think it's a case of Goldmanites parading up and down and saying how great they are and making a big pomp over their payday, so much as their payday is getting far more attention than it would have gotten a hundred years ago due to the spread of information.

Yes, but that's Goldman's fault. They chose to become a public firm, and hence, compensation is subject to the public's scrutiny.

[Stefan Zota]

2 important observations:

Well, yes. Goldman is earning $700K/employee, which is probably going to be quadruple the average of any fortune-500 company outside of finance.

Average per employee is not a decisive indicator since the compensation is not distributed uniformly. Certain areas that produced a lot of profit, will likely receive more from the compensation. This applies to any company and it makes sense.

Yes, but that's Goldman's fault. They chose to become a public firm, and hence, compensation is subject to the public's scrutiny.

Slight, but essential fallacy: Public company allows the public to buy a stake in the company, public sector (tax-payers) don't own anything automatically.

Only top execs (e.g. CEO, CFO) need to make public their wages. The total bonus pool is sharedholders' concern. They are the only ones "paying" directly these costs. If they are fine with rewarding best people and attracting new talent, then there is no legal issue.

The core of the discussion here is around the risk taken to receive high compensation that can jeopardize other companies or financial markets in general. So far, I don't think anyone can claim that GS has made major blunders and lost huge sums. No reason to change completely their risk management system. On the contrary, they seem to be consistently better then the opponents in this area.
So in this case, shouldnt taxpayers be more "worried" about risks taken by BoFa or Citi especially since they haven't repaid TARP funds? ...

[GoIllini]

Originally Posted by Stefan Zota Average per employee is not a decisive indicator since the compensation is not distributed uniformly. Certain areas that produced a lot of profit, will likely receive more from the compensation. This applies to any company and it makes sense.

Exactly, and my point is that Goldman's 31,000 employees include security guards, janitors, car service employees, food service, mail room employees and more. That leaves plenty of money for the average analyst, let alone MD.

I can guarantee that for any number x<31,000, the following statement is true:

"The x highest paid employees at Goldman Sachs earned more than the x highest paid employees at Pfizer."

(Pfizer has a much higher headcount.)

Slight, but essential fallacy: Public company allows the public to buy a stake in the company, public sector (tax-payers) don't own anything automatically.

It's not a fallacy. You're correct in saying that the media may not have a stake in these companies, but it was ultimately decisions that they made ten years ago that is now making this public information. Had they remained a private partnership, the media would not be able to report this compensation, and in fact, likely have no idea what bonuses actually were. If GS had remained a partnership, they'd be able to hand out ten times as much and nobody in media would be the wiser.

100 years ago, the media wouldn't have cared because GS would have been a partnership.

The core of the discussion here is around the risk taken to receive high compensation that can jeopardize other companies or financial markets in general. So far, I don't think anyone can claim that GS has made major blunders and lost huge sums. No reason to change completely their risk management system. On the contrary, they seem to be consistently better then the opponents in this area.

Well, again, I think the real question is whether Goldman's move, in this economic and regulatory environment, is good for anyone who receives a bonus- including their employees in the long run.

Some combination of them and the smarty-pants off in Washington is creating negative externalities for everyone on this forum. I ultimately can't blame the politicians because they're predictably foolish. But GS should know better. Up until this point, I've been annoyed about the compensation hearings in Washington, but I now believe Blankenfein deserves to get called before the House Financial Services Committee and be grilled about his bonus. He's just as short-sighted as the bozos who will be doing the grilling.

If the Dems remain in power, the economy remains weak, and the public remains stricken by class envy and anger over egregious bonuses, everyone will look back on this moment in a few years and wonder, "What the heck was GS thinking"?

[Stefan Zota]

Originally Posted by GoIllini Exactly, and my point is that Goldman's 31,000 employees include security guards, janitors, car service employees, food service, mail room employees and more. That leaves plenty of money for the average analyst, let alone MD.

Not true. Most items you are refering are corporate services. Only a very small piece is handled by GS employees, most of them are contracted to other companies.
GS will focus resources where they are best. There are no bank-tellers, no branch personnel like other commercial banks.

Originally Posted by GoIllini I can guarantee that for any number x<31,000, the following statement is true: "The x highest paid employees at Goldman Sachs earned more than the x highest paid employees at Pfizer." (Pfizer has a much higher headcount.)

Depends on the value of x. If x is 20,000, you cannot make that statement.

Also, you are missing one important point: how do you know the money is not deserved?
Perhaps a developer at GS works much more than one at Pfizer. In fact, GS is known to be a pretty intense place in core areas including Technology, so you won't find many 9-5 people. There is no overtime income except possible end-of-year bonus.

Originally Posted by GoIllini It's not a fallacy. You're correct in saying that the media may not have a stake in these companies, but it was ultimately decisions that they made ten years ago that is now making this public information. Had they remained a private partnership, the media would not be able to report this compensation, and in fact, likely have no idea what bonuses actually were. If GS had remained a partnership, they'd be able to hand out ten times as much and nobody in media would be the wiser. 100 years ago, the media wouldn't have cared because GS would have been a partnership.

There is no problem to make overall numbers public, but who decides what is outrageous? As far as I am aware, legally, only stakeholders have the right to approve/disapprove the budget. Is the media suddenly owning GS?
From a public economical perspective, would it make sense to ave more focus on high losses companies receiving TARP?
Morally it is an endless debate.

Originally Posted by GoIllini Well, again, I think the real question is whether Goldman's move, in this economic and regulatory environment, is good for anyone who receives a bonus- including their employees in the long run.

If it is not good for GS, they will suffer first. If possibility of high bonus leads to bad decisions, then company will lose huge capital within days. However, by some "coincidence" it hasn't happened so far for GS, but it did for most other competitors.

Originally Posted by GoIllini Some combination of them and the smarty-pants off in Washington is creating negative externalities for everyone on this forum. I ultimately can't blame the politicians because they're predictably foolish. But GS should know better. Up until this point, I've been annoyed about the compensation hearings in Washington, but I now believe Blankenfein deserves to get called before the House Financial Services Committee and be grilled about his bonus. He's just as short-sighted as the bozos who will be doing the grilling. If the Dems remain in power, the economy remains weak, and the public remains stricken by class envy and anger over egregious bonuses, everyone will look back on this moment in a few years and wonder, "What the heck was GS thinking"?

A hearing by definition requires some decision power. If the group of people (e.g. Financial Services Committee) can change a specific CEO or they can impose a policy, then it makes sense to "interrogate".
However there isn't such right with GS/JP Morgan etc. They can invite high execs to give an opinion to ask for some information.

What you are saying is: I am annoyed by some people receiving bonus, so let me call my representative to teach those guys a lesson.
Welcome to a socialist state

[bigbadwolf]

Originally Posted by IlyaKEightSix However, what Standard Oil and Mr. Rockefeller didn't have to contend with was the mainstream media. Imagine if this was happening today.

It was muck-raking journalism that was instrumental in anti-trust legislation at the time (which included the fracturing of the Standard Oil empire). Furthermore, anti-rich sentiment -- probably fueled by critical journalism -- is probably what galvanised J.D. Rockefeller to part with hundreds of millions of dollars. Today's media -- owned by a handful of corporate giants -- is far tamer.

The absence of the MSM was the reason that Britain was able to torch Dresden and Hamburg in WW2, and why the U.S. was able to nuke Japan--twice.

Why are you wasting bandwidth to make such silly statements? If today's media had been present (sorry, "embedded") with Allied forces, they'd have been cheerleaders with regard to Dresden and Nagasaki (the same way they've been in Iraq). The mass media of today is just another branch of the government. You seem to be laboring under the delusion that mass media acts as critical oversight over government policy. It does not. Its primary function is obfuscation and disinformation. Furthermore, even if the occasional morsel does get out (usually through channels like Al-Jazeera), do you think that changes policy an iota? Unarmed US drones are killing civilians in Pakistan every day -- this is common knowledge. Do you think this is changing US policy?

[GoIllini]

Depends on the value of x. If x is 20,000, you cannot make that statement.

Of course I can, because the average compensation of the top 20K Pfizer employees is below $700K, but we know the average compensation of the top 20K GS employees is above $700K.

Also, you are missing one important point: how do you know the money is not deserved? Perhaps a developer at GS works much more than one at Pfizer. In fact, GS is known to be a pretty intense place in core areas including Technology, so you won't find many 9-5 people. There is no overtime income except possible end-of-year bonus.

The question isn't whether it's deserved- the question is whether the public thinks they deserve it. Goldman's decision not only lowers the public's perception of them, but also of me and everyone else in the financial industry.

If it is not good for GS, they will suffer first. If possibility of high bonus leads to bad decisions, then company will lose huge capital within days. However, by some "coincidence" it hasn't happened so far for GS, but it did for most other competitors.

Not necessarily true. CC: Negative externalities.

Some combination of GS and the DC politicians present a negative externality for everyone else on the street.

A hearing by definition requires some decision power. If the group of people (e.g. Financial Services Committee) can change a specific CEO or they can impose a policy, then it makes sense to "interrogate". However there isn't such right with GS/JP Morgan etc. They can invite high execs to give an opinion to ask for some information.

Again, Congress has the power of subpoena in any investigation. Congress can decide to investigate Major League Baseball and "invite" (AKA require) players suspected of being on steroids to testify.

What you are saying is: I am annoyed by some people receiving bonus, so let me call my representative to teach those guys a lesson. Welcome to a socialist state

I'm not doing that, but other people are. And GS is accelerating the process of our country turning socialist.

Best thing to do is act like the capitalists of the 1910s-1970s; realize that capitalism doesn't exist for capitalism's sake but because it creates value for everyone in society. The day that the majority of the country's capital stops getting why we're still capitalist and what they need to make sure capitalism does for society is the day that we start becoming socialist.

Maybe that day has already come- maybe as much as 25-30 years ago. Oh well.

[IlyaKEightSix]

Well, so long as we have Silicon Valley, and the budding green energy fields essentially recycling all of the laid-off auto employees, there'll still be capitalism. It'll just be in California.

That said, for those who are IEORs, there's not much for us there.

As for people voting to get bonuses taxed or whatnot, that'd be shooting our own financial system in the foot. No matter what the little people want, there are always unintended consequences. If you make life hard for bankers in the US, then they'll go overseas and that's tax revenue that the US will not receive, and that'll be that.

[Stefan Zota]

Originally Posted by GoIllini Of course I can, because the average compensation of the top 20K Pfizer employees is below $700K, but we know the average compensation of the top 20K GS employees is above $700K.

Perhaps I wasn't clear. If you take all employees from both companies, add bonus and base salary, sort them, you cannot say that gs[20000] >> pf[20000]
This is all that matters for many employees.

The question isn't whether it's deserved- the question is whether the public thinks they deserve it. Goldman's decision not only lowers the public's perception of them, but also of me and everyone else in the financial industry.

The public can be easily manipulated. In times of stress, easiest thing is to point fingers. We are rational individuals here, so I have given you a rational argument.
Other than that, anyone can have a personal preference for a company or another.

Not necessarily true. CC: Negative externalities. Some combination of GS and the DC politicians present a negative externality for everyone else on the street.

Statement is valid considering rest of the market. If you make significant part of capital by trading, other companies have large losses, I would say that risk management is not bad. If you just toss a coin and bet 200 million a day, do you think you will always win?

Again, Congress has the power of subpoena in any investigation. Congress can decide to investigate Major League Baseball and "invite" (AKA require) players suspected of being on steroids to testify.

If somebody would sue GS for high bonuses with a solid legal foundation, then I agree with you. However I am not aware of any such event. Total compensation is public, it is chosen by board validated by shareholders. What is law broken?

I'm not doing that, but other people are. And GS is accelerating the process of our country turning socialist.

Let's follow the logic. Statement: A successful company in a capitalist system is leading everybody to socialism. So rest of the companies don't want to earn more capital and enter in a competition. They just want to get the profit distributed equally.
What am I missing here? In other words, perhaps Exxon or PetroChina are encouraging communism too. They have large profits every year, they can give any bonuses they want.

Best thing to do is act like the capitalists of the 1910s-1970s; realize that capitalism doesn't exist for capitalism's sake but because it creates value for everyone in society. The day that the majority of the country's capital stops getting why we're still capitalist and what they need to make sure capitalism does for society is the day that we start becoming socialist. Maybe that day has already come- maybe as much as 25-30 years ago. Oh well

So the next step is that US capitalism doesn't generate any value for society. It allows these companies to make any profit and give out any compensations. Then, by all means, you can move to another country, preferrably a communist/socialist one.
Choose any of them and take an average person level of life. If you see people live better on the average in that country, then by all means, use the same system.
At the moment, people live on the average much worse in socialist system.

So you can be starving and happy that everyone else is starving or you can have have something to eat, a car but be angry that others are being compensated. Your choice ...