class stratification in America
Take a look. Then ask yourself honestly. Don't we have a social system with an entitled elite class on top and then on the bottom a class of struggling working people, holding up the country club on their shoulders?
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Median Salary by Job - All K-12 Teachers (United States) | ||||||||
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| Currency: USD | Updated: 9/30/2008 | Individuals reporting: 34,756 | ||||||||
Now compare. [from various news sources including Forbes, USNews, NYTimes.
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A few days after the federal government unveiled an $85 billion bailout package for the insurance company AIG, executives from one of the firm's subsidiaries went on a week-long retreat to the St. Regis Resort in Monarch Beach, Calif. The tab: $443,000.
...Rebukes about the expensive retreat were just one aspect of a broad congressional hearing into AIG today, but it showed the level of distrust and political angst by lawmakers who have been pressed by constituents to take corporate executives to task for the financial crisis.
"Well, average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," said Rep. Henry A. Waxman (D-Calif.), the panel's chairman. "Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."
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...in hearings today before the House Oversight and Reform Committee, you heard a case that at Lehman Brothers, executive compensation may have been more than a mere symptom of excess; it may have contributed to the firm’s demise.
According to the New York Times coverage:
“Even as the investment bank Lehman Brothers pleaded for a federal bailout to save it from bankruptcy protection, it approved millions of dollars in bonuses for departing executives, a congressional committee was told Monday….
“One Lehman document among thousands reviewed by the House committee showed that four days before the bank filed for bankruptcy protection, Lehman’s compensation committee was asked to grant $20 million in ‘special payments’ for three executives who were leaving.”
...executives were warned in a January 2008 meeting that the company was facing liquidity problems. Yet the firm moved forward with capital outlays, including $5 billion in bonuses, $4 billion in shares (buybacks) and $750,000 in dividend payments between 2007 and the firm’s bankruptcy filing on Sept. 15.”
They knew they had liquidity issues, yet they paid out $5 billion in bonuses and another $4 billion in stock buybacks anyway? The truth is, those huge bonuses had become so engrained in the Wall Street culture that employees felt entitled to them regardless of how the company itself performed.
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Executives at the center of the current financial storm happened to collect some of the largest. Lloyd Blankfein, chief executive officer of Goldman Sachs (nyse: GS - news - people ), took home $74 million in salary, bonuses and other awards last year. Richard Fuld, chief executive of the now bankrupt Lehman Brothers (nyse: LEH - news - people ), received $71.9 million.
James E. Cayne, former chief executive officer of Bear Stearns made $49.31 million over the last two years. He famously fought the bailout of Long-Term Capital Management, the debt-heavy hedge fund in 1998, only to steer Bear Stearns into a fatal debt-heavy foray into mortgage securities. The avid bridge player was busy at a tournament this spring when Bear Stearns melted down.
Martin J Sullivan, former chief executive officer of American International Group (nyse: AIG - news - people ), raked in $39.6 million in the last three years. Sullivan oversaw two quarters of record losses as the insurance giant's head. Shareholders pressured him to quit in June. Severance package plus bonus: $19 million.
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Thomas Montag just received $40 million to start work today as Merrill Lynch's new head of sales. Mr. Montag is clearly a brilliant salesman, having negotiated such a rich deal from Merrill.
Not only has Merrill been forced to raise billions to replenish its capital as it has lost an insane amount of money in the past year, but the investment bank didn't even need to steal Mr. Montag away from a competitor.
Mr. Montag left Goldman in December and was presumably collecting unemployment checks from the government when Merrill's John Thain drove up in a Wells Fargo armored car filled with bars of gold and handed Mr. Montag the keys.
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All told, this year's (2006) bonus pool for Wall Street executives hit $23.9 billion, the New York State Comptroller's office estimates. That's a 17% jump from last year's bonus pool of $20.5 billion, and it works out to an average bonus of $137,580 for every person employed in the financial services industry.
But few will receive bonus checks for the average amount. Instead, the top executives at these firms and their most successful traders will get bonuses north of $10 million each, while the underperformers and support staff will receive far less than the average.
Such is life in the fast lane of the financial sector
