{"id":238051,"date":"2010-01-27T13:45:24","date_gmt":"2010-01-27T18:45:24","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.34314"},"modified":"2010-01-27T13:46:03","modified_gmt":"2010-01-27T18:46:03","slug":"banker-pay-illustrated","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/238051","title":{"rendered":"Banker Pay Illustrated"},"content":{"rendered":"

The New York Times has an article<\/a> today about how banks are choosing to reward its employees more than shareholders. This phenomenon has been noted before, particularly in the case of Goldman Sachs<\/a>. There, some shareholders have complained about the amount of compensation. The Times article, in delightful chart format, shows exactly why shareholders should be so unhappy.<\/p>\n

The NY times says: <\/p>\n

Roughly 90 cents out of every dollar that these banks earned in 2009 — and sometimes more — is going toward employee salaries, bonuses and benefits, according to company filings.<\/p><\/blockquote>\n

And here’s a chart with some more detail: <\/p>\n

\"ny<\/a><\/p>\n

The chart on the left, in particular, is kind of amazing. Despite all the complaining about Goldman Sachs, their shareholders should be happiest. Their bankers are getting below 50% of the profits. Compare that with Citigroup. Its employees are getting nearly 150%! The Times notes: <\/p>\n

To compete with well-heeled rivals, banks like Citigroup are giving their employees an unheard-of cut of the winnings. Citigroup paid its employees so much in 2009 — $24.9 billion — that the company more than wiped out every penny of profit. After paying its employees and returning billions of bailout dollars, Citigroup posted a $1.6 billion annual loss.<\/p><\/blockquote>\n

So Citigroup literally posted a loss due to bonus compensation. That’s insane. <\/p>\n

But more generally, are the bank shareholders right to complain? I think so. The employees were the ones who got these firms into trouble, while the shareholders were the ones who had all the equity risk. So the idea that the vast, vast amount of profits from most of these banks is going to the employees, and not the shareholders, does seem to put the risk-reward relationship on its head. <\/p>\n

Shareholders should demand that banks revisit the relationship between profits and employee compensation. I think their voices would prove louder than populist complaints about excessive pay.<\/p>\n



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The New York Times has an article today about how banks are choosing to reward its employees more than shareholders. This phenomenon has been noted before, particularly in the case of Goldman Sachs. There, some shareholders have complained about the amount of compensation. The Times article, in delightful chart format, shows exactly why shareholders should […]<\/p>\n","protected":false},"author":1535,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-238051","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/238051","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1535"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=238051"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/238051\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=238051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=238051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=238051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}