Monday, September 22, 2008

On Financial Executives' Compensation Packages

The Wall Street banksters want to keep the very large executive compensation packages. Remember the Lehman Brothers and how the firm disappeared last week? Do you know what happened to its executives? This:

Last week Barclays paid $1.75 billion to buy Lehman's North American investment banking and capital markets business. It emerged over the weekend that Barclays had agreed to pay $2.5 billion in bonuses to Lehman bankers in the United States in a move that has angered stricken staff in London.

Two and a half billion in bonuses, for the people who were running the firm when it exploded. Isn't that something? Did the secretaries and janitors get anything?

What is the rationale behind the financial executives needing as much money as some small countries have in their budgets?

The usual one is this: Really smart and clever financial managers are an incredibly rare talent. In fact, there are so few of them that all the firms are bidding for the same few individuals and the only way to get a really good executive is by buying him (it's almost always "him") for billions and billions. Otherwise the firms will end up having to hire some ordinary schmuck with just a few PhDs and a few decades' experience and that would never do.

This rationale has been employed for quite a while. So what did the industry get for the high executive compensation? The crashing market, it seems to me. IF this particular talent that created the crash really is so very rare we can all thank our chosen divinity for its rarity.

In short, this is all utter crap.