posted on Jan, 30 2009 @ 08:54 AM
Thanks for your comments and I appreciate the opportunity to respond.
In the asset management and investment banking industry we do have contracts. the contract is a base salary and an opportunity to share in the
profits of the firm. That is a contract that I knowingly entered. In the industry, high base salaries that are too high don't work. they over
compensate folks when performance is poor and under compensation when performance is good
The industry is an objective one. you perform better than the benchmarks and you make more money. Your performance sucks and you lose a lot of
these firms have nothing but assets. they can be gone in days if confidence is lost. Bear Sterns lost the confidence of the marketplace and disolved
in days. You get paid a premium due to the tenuous nature of the business.
I don't get any long term benefits at all. no pension, no profit sharing, nothing. I'm 100 responsible for my future as are others in the industry
and it through the investment of bonus dollars that that planning occurs. It is not like the UAW where they have rich retirement benefits in the
form of defined benefit plans and great health insurance for the balance of their lives. We don't get that. When you have no security you should
get paid more. Again, that is the model that I have choosen - I like the risk and reward elements of it.
You raise a number of concerns about shareholder rights, third partys, etc.. I agree with you 100% and would lump the lot into the category of
transparency. Investors have the ultimate weapon. Don't invest their money in firms that lack transparency. There are many firms who have
terrific transparency and clearly articulate how executives are compensated, what it is linked to, who sits on the compensation committee, the terms
of their long-term stock compensation, etc. These fims are proud of their governance and readily acknowledge it. It may take a bit of work to
find them, but they're out there and that is where you should invest if you are concerned about transparency.
This is a very complex topic and I'm having a bit of trouble with the space limitations, so I'll end with a two other comments.
For every dude that is making a tremendous amount of money there are thousands of "regular" folks. The margin clerk who gets up at 5:00 to slog it
in on the train to Wall Street to work in a very intense environment, back home 2 hours from work and over again. This is a $60K/year guy with a
family and the vast majority of the folks losing their jobs in this business are like that, not the dude who gets an 8 figure bonus.
I'm not a government guy, but there are legitimate roles for government here. Mandated levels of transparency, standard methodologies for rating
agencys, etc. How could these debt securities get aaa ratings when 2/3 of the assets were crap? I think there is a role for the government in that
aspect of the business.
At a personal level, at the firm I work at, 18 of the top 30 executives were canned or left in '08. 1/3 of the firm has been laid off and what
folks had in firm assets went to $0 overnight. There is some "justice" in this model. Again the risk and reward deal at play, but far more
accountability than for example than the auto industry where the dudes are making the same amount of money and have been producing terrible products
and losing market share for 20 years.
I hope I answered at least some of your questions, or at least provided more clarity than I was originally able to