Morning Coffee Feb 22 2012

The Great Bonus Backlash

By julie steinberg and kelly eggers

Those bonuses, they seem to be shrinking like the bank balance of Jon Corzine.

In the space of a couple of days, Société Générale, Lloyds, Bank of America and, reportedly, HSBC, are all taking back money, reducing payouts, or considering doing so. What's left, says Financial News columnist William Wright, is a debate about how much of a bank's profits should be paid to its workers, i.e. the big cheeses at the top, and how much to shareholders.

Over six years beginning in 2006, says Wright, investment banks have spent, on average, three times as much on staff as they have generated in profits before tax. That suggests that recent bonus cuts of between 30% and 60% aren't nearly enough to bring back in line the balance between payments to staff and those to shareholders.

A look at the ratios at various banks is illustrative. Goldman's comp costs of $91.4 billion over the six years was 126% of its pretax profits of $72.4 billion. Its closest competitor, Morgan Stanley, had compensation costs that were 353% of profit.

As Wright concludes, seems that during the boom, everyone wanted to be like Goldman when it came to pay, but not to profits. (Financial News)

Internal Optimism (Bank of America)

CFOs in Asia are feeling increasingly wary about the global financial situation but optimistic about their home economies, a survey from Bank of America Merrill Lynch found.

Employee Evaluations (WSJ via FINS)

When cleaning up your Facebook profile, consider how you'd like to be viewed as a worker. Employees whose Facebook profiles indicated they were extroverted, had a wide range of hobbies and interests and were conscientious and agreeable were also reported as good performers on the job.

Not so Fast (WSJ)

Contrary to popular belief, Japanese banks haven't avoided the mortgage meltdown. U.S. securities regulators have warned Mizuho's former structured finance guru, Alexander Rekeda, he may face potential charges, according to a regulatory filing.

Switching Gears (Business Insider)

After being ousted from her post at Bank of America last year, Sallie Krawcheck is reportedly looking to make her comeback. Maybe her stint co-hosting at CNBC yesterday will entice her to change careers.

Big Incentives (Reuters)

Merrill Lynch is breaking out the big guns. In an effort to recruit the best advisers to its team, the brokerage is offering the highest performers at rival firms like UBS, Morgan Stanley Smith Barney and Wells Fargo a large bonus upfront and additional incentives for transferring client assets within six months of joining the firm.

Poaching (WSJ via FINS)

As it looks to further expand in Asia, Lazard scooped up Glenn Porritt, formerly the head of Asian M&A for the Australia and New Zealand Banking Group, for the top spot in its Singapore investment bank.

Number Crunchers (MarketWatch)

Keep those abacuses handy. The Accountant's World Survey of 2012 says the profession is booming, particularly in Asia.

Buzz Around the Office

Blind Boxing (YouTube)

These guys could use a little help from Obi-Wan Kenobi.

List of the Day: Juggling Jobs

Balancing more than one job takes careful consideration.

1. Read all employee handbooks and pay attention to the rules about outside activities.

2. Consider any ethical or professional dilemmas in wearing more than one hat.

3. Assuming everything is clear, find a business card that encapsulates all of your roles.


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