tag:blogger.com,1999:blog-4815867514277794362.post7880935754860444647..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: AIG bonusesJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-4815867514277794362.post-88230410132723615532009-03-23T12:40:00.000+11:002009-03-23T12:40:00.000+11:00Directors of public companies appoint each other t...Directors of public companies appoint each other to boards and set each other's pay. Provided their pay isn't so large that it shows up as a major cost item to the company, they can set each other's pay however they want. It's not in the shareholder's interest to create a major fuss pushing their share's price down unless the pay is a big chunk of revenue. It's not a job market at all, it's just groups of "in" people creaming off what they can for themselves. <BR/><BR/>If "juries" from among the shareholders appointed directors and set pay, you'd actually see a job market and get very different results.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-82105679818608435072009-03-21T21:57:00.000+11:002009-03-21T21:57:00.000+11:00I am rather amused by the bonus legislation. The l...I am rather amused by the bonus legislation. The legislators are not aware of the consequences.<BR/>Let's consider a somewhat typical husband and wife in NYC I happen to know very well.<BR/>The husband makes 115k base, 100k bonus.<BR/>The wife makes 125k base, 25k bonus.<BR/>They work hard, have a good life, but they also donate time and money to charities, and they are friendly, open-minded and respectful of cultural and religious differences. Few comparisons with Gordon Gekko hold up.<BR/>Total income: 375k. <BR/>If one of them or both were to resign sometime in the middle of 2009, the combined pre tax income would drop to 200k or so, certainly below 250k. Their net income would be roughly the same.<BR/>Even better, the husband or wife would get themself fired, so they could collect some unemployment from the government. If this legislation passes the senate, expect unemployment to increase dramatically.<BR/><BR/>The husband would feel some regret about his recent marriage though. Without the marriage, this legislation would have not impacted the couple at all.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-42218046636158434402009-03-21T12:40:00.000+11:002009-03-21T12:40:00.000+11:00http://www.nytimes.com/2009/03/21/business/21bank....http://www.nytimes.com/2009/03/21/business/21bank.html?hpbabar ganeshhttps://www.blogger.com/profile/01898299856773302141noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-33088182165853367272009-03-21T10:58:00.000+11:002009-03-21T10:58:00.000+11:00Should have included this earlier, but what do you...Should have included this earlier, but what do you pay someone who brings in $1B high margin revenue? Those are the kind of numbers these people get paid on. If they don't get paid big, they will either go home, start their own shop, or go to a competitor who will. You might as well grouse about sports or movie star pay.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-2400932034853452472009-03-21T10:55:00.000+11:002009-03-21T10:55:00.000+11:00People have been making ungodly sums of money in t...People have been making ungodly sums of money in the financial markets since they have existed. they are getting taken to the woodshed now, but believe me, they will be back.<BR/><BR/>That is a nice story about wht you would pay your 21 Century manager, but you leave yourself open to the probability that your CEo office would be a revolving door to places that would pay more. Its just the ay it is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-14374978761669735022009-03-21T07:01:00.000+11:002009-03-21T07:01:00.000+11:00John--Any thoughts on GE's Thursday presentation? ...John--<BR/><BR/>Any thoughts on GE's Thursday presentation? I was a little disturbed that they used the Fed worst-case scenario for their own worst-case estimates, given that this now seems more like a baseline.vmhttps://www.blogger.com/profile/13574839969526584236noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-86473040276040611912009-03-21T04:41:00.000+11:002009-03-21T04:41:00.000+11:00My dad always used to say 'no matter how many toil...My dad always used to say 'no matter how many toilets you have, you can only use only one at a time'. So how many toilets (houses, cars, ...) do people need?<BR/><BR/>On the other hand would you not accept these kind of money if you could?<BR/><BR/>Take care, <BR/>JulieAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-74860384214130894722009-03-21T04:38:00.000+11:002009-03-21T04:38:00.000+11:00I agree with the glazing over effect when it comes...I agree with the glazing over effect when it comes to large sums of money. Many in politics can not process the ideas of millions, billions and trillions. Thus any numbers that end with "ions" attached to compensation is deemed outrageous. <BR/><BR/>The AIG debacle is nothing but political grandstanding. It's dishonesty on the part of politicians and media that had everything to do with the crisis in the first place. Although by diverting attention and scrutiny away from themselves, and hanging effigies of executives for the public to burn, they have so far escaped the wrath of populist anger.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-51001734008357105022009-03-21T01:55:00.000+11:002009-03-21T01:55:00.000+11:00I know this isn't the tone du jour on finance blog...I know this isn't the tone du jour on finance blogs, but I think your point about large numbers is as much a cause of the crisis as anything. Bankers, executives, and fund managers are truly delusional about the money they had been making. They didn't see it as being exceptional and mostly didn't plan for its end. <BR/><BR/>I live in a neighborhood of gilded age mansions and see how in another age men assumed their level of success was permanent. But it wasn't, the very large number should have indicated an exceptional windfall. But somehow, they never grasped that and the mansions had to be liquidated and turned into apartments. Something similar will happen presently.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-78123539022643858802009-03-20T23:01:00.000+11:002009-03-20T23:01:00.000+11:00Babar ganesh is onto something.Because most people...Babar ganesh is onto something.<BR/><BR/>Because most people can't tell the difference between a 1.5 million bonus and they are innured to 35 million ones if you really are a 1.5 million per annum exec (say the CEO of 21st century) you ask for 30 and settle for 5.<BR/><BR/>Anger arb is a game here. People do not think clearly about large numbers.<BR/><BR/>JJohn Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-45586835164628814032009-03-20T22:55:00.000+11:002009-03-20T22:55:00.000+11:00anger arb. i can just see it.arbing the diff bet...anger arb. i can just see it.<BR/><BR/>arbing the diff between trillion and billion and million. lots of money to be had there.babar ganeshhttps://www.blogger.com/profile/01898299856773302141noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-20050727497961996712009-03-20T19:07:00.000+11:002009-03-20T19:07:00.000+11:00John, I trust that you've seen today's XKCD striph...John, I trust that you've seen today's XKCD strip<BR/>http://xkcd.com/558/<BR/><BR/>peterpeterxyzhttps://www.blogger.com/profile/02517673571188091180noreply@blogger.com