Cutting Bonuses, Not Laying Off Workers

[Kathianne]

My friends husband is an associate director for one of the biggest brokerage houses at the Mercantile Exchange. All of the houses have been struggling since the recession started.

Last year the bonuses of directors and associate directors were cut by 1/2. This year, they are cutting that amount by another 1/3. They've laid no workers off. These guys can afford the cuts in bonuses, I wonder if other companies have considered the same or done so?

[Robert A Whit]

My friends husband is an associate director for one of the biggest brokerage houses at the Mercantile Exchange. All of the houses have been struggling since the recession started.

Last year the bonuses of directors and associate directors were cut by 1/2. This year, they are cutting that amount by another 1/3. They've laid no workers off. These guys can afford the cuts in bonuses, I wonder if other companies have considered the same or done so?

I would love to help you find out. But I don't know anybody in this field.

I wonder about the houses devoted to stocks? This may spread.

[Kathianne]

I would love to help you find out. But I don't know anybody in this field.

I wonder about the houses devoted to stocks? This may spread.

:rolleyes:

The query was general, not specific.

Here's an example, of 'bad bosses':

http://www.minyanville.com/sectors/consumer/articles/Citigroup-layoffs-Vikram-Pandit-John-Havens/12/11/2012/id/46570


Bad Bosses: How Inept Execs Got Away With Mismanagement and Scandal In 2012
By AOL Jobs Dec 11, 2012



Companies lay off vast numbers of workers with such depressing regularity that you may not have noticed the announcement. Last week Citigroup Inc. (NYSE:C (http://finance.minyanville.com/minyanville?Page=QUOTE&Ticker=C)) said it would lay off 11,000 workers (http://www.reuters.com/article/2012/12/05/us-citigroup-jobs-idUSBRE8B40NY20121205) worldwide, citing a need to reduce expenses. Yet, at the same time, the company revealed that it gave top execs hefty "incentive awards," including $6.7 million to Vikram Pandit, Citi's former CEO.

The bank, which disclosed the payment in a regulatory filing Friday, also paid its former chief operating officer, John Havens, who left Citi last month along with Pandit, $6.8 million. As The Associated Press reports (http://www.businessweek.com/ap/2012-11-10/former-citi-chief-pandit-gets-6-dot-7-million-payment), the executives will get 40% of the money right away, and the rest will be paid in installments through 2017.

The company said Pandit and Havens will continue to vest in deferred stock and deferred cash incentive awards previously granted to them. Those were worth $8.8 million for Pandit and $8.7 million for Havens.

The outsized payments to the Citi execs aren't isolated examples. Numerous other leaders at other companies who presided over huge financial losses, disasters or other mismanagement, have escaped job loss, criminal charges or steep fines -- the kinds of punishment deemed appropriate in such failures.

In fact, some also walked away with golden parachutes worth millions of dollars, and found new and sometimes even better jobs.

The regularity with which such instances occur raises important questions: Why aren't executives being held accountable? Are the financial reforms that were put in place by Sarbanes-Oxley in 2002 to protect shareholders and the general public from accounting errors and fraudulent practices a failure?

...



As for my friend's husband, it was the directors and associates that chose to cut their bonuses and not let others go.

So far, it's cost my friend's husband over $250k, not including this year. They'd done a lesser amount before last year. This year, the bonuses are becoming about another month's salary. Again, they chose to do this.

Now, what about other companies regardless of market?

[Kathianne]

Trying:

http://www.startribune.com/sports/wild/181104031.html?refer=y


Lockout prompts Wild to cut employees' pay by 20 percent

Article by: MICHAEL RUSSO (http://www.startribune.com/bios/10645841.html) , Star Tribune
Updated: November 28, 2012 - 7:33 AM


Most of the team's 200-person staff will have their work week reduced to 32 hours, but no layoffs were announced.


With the NHL lockout in its 12th week and no end in sight, the Wild announced cost- cutting measures during a staff meeting Tuesday.


The vast majority of the 200-person staff was informed that it will begin four-day, 32-hour work weeks that will reduce salaries by 20 percent. In order to alleviate the stress heading into the holiday shopping season, employees won't feel losses for the first time until after Christmas.


"Our whole philosophy is we're all in this together," chief operating officer Matt Majka said. "We want to keep the staff intact because we still think we can play hockey this year. That's why we're announcing no layoffs. It's an all-for-one thing, and that's why we're going to do it this way with everyone feeling it a little bit."


If the lockout results in the cancellation of the 2012-13 season, Majka wouldn't speculate whether layoffs would be on the horizon.


"Honestly, we have not had any developed discussions about what we do next," Majka said. "We're taking this step for today, and we'll have to see what will happen over the next couple months."


The objective is to avoid layoffs, which is why Majka said the club decided the fairest thing to do was "difficult" across-the-board pay cuts. Employees for teams in Vancouver, Montreal, Ottawa, Columbus and St. Louis have been working four-day weeks for some time, as well as full-time employees at NHL headquarters in New York and Toronto. Ottawa, Florida, Edmonton, Phoenix and St. Louis have laid off employees.


Previously, the only Wild employees to receive cuts in base pay were those making more than $70,000 a year, and that was a 30 or 35 percent reduction to the compensation over that $70,000 threshold. Those employees include executives on the business side and management, coaches, trainers and broadcasters on the hockey operations side.

...

[Robert A Whit]

I don't have enough facts to pass judgement on what they did Kath. Sorry but though I am familiar with corps and bonus and ceo pay, just not enough for me to go on.

[gabosaurus]

Unfortunately, paying top brass millions in bonuses while shedding workers has become commonplace. Hostess is playing its top execs big bucks to make the company go away. Big banks awarded execs huge amounts while accepting government bailouts.

[Robert A Whit]

Unfortunately, paying top brass millions in bonuses while shedding workers has become commonplace. Hostess is playing its top execs big bucks to make the company go away. Big banks awarded execs huge amounts while accepting government bailouts.
If you are familiar, you understand as Judge Judy does that what is contained inside the 4 corners of a legal contract must be followed. Paying bonus is a term in the contract.

We must obey the law, eh?

[Kathianne]

Unfortunately, paying top brass millions in bonuses while shedding workers has become commonplace. Hostess is playing its top execs big bucks to make the company go away. Big banks awarded execs huge amounts while accepting government bailouts.

Obviously I've not a clue to his total income, even best friends don't share that kind of info. The premise though, however it divides up is certainly better than what Chase did, no? Execs get less, workers keep job. No government telling them to do 'the right thing.'

[logroller]

Unfortunately, paying top brass millions in bonuses while shedding workers has become commonplace. Hostess is playing its top execs big bucks to make the company go away. Big banks awarded execs huge amounts while accepting government bailouts.
Golden parachutes make sense. Lets say your school was to be closed. Those who chose to could stay on to assist in that closure to make sure the shareholders, ie the taxpayers, would receive the most that they could. Those administrators, (ie executives), could just as easily make it the worst transition ever, and everyone would lose, or they could do things like transfer the assets to schools that would now be expected to provide the product/service, ie educating the kids.

Don't forget, those executives are out of a job too; this is the best they can do. If it were possible to satisfy the baker union and maintain their business-- they would have-- IF it was feasible. Clearly people don't care about twinkies, dingdongs and snowballs being made by hostess any more than the union did.


Whether the same applies to Chase remains to be seen-- do you bank at Chase; and if not, given the story from the OP would you know consider switching to them to put, almost literally, your money where your mouth is?

[Kathianne]

Golden parachutes make sense. Lets say your school was to be closed. Those who chose to could stay on to assist in that closure to make sure the shareholders, ie the taxpayers, would receive the most that they could. Those administrators, (ie executives), could just as easily make it the worst transition ever, and everyone would lose, or they could do things like transfer the assets to schools that would now be expected to provide the product/service, ie educating the kids.

Don't forget, those executives are out of a job too; this is the best they can do. If it were possible to satisfy the baker union and maintain their business-- they would have-- IF it was feasible. Clearly people don't care about twinkies, dingdongs and snowballs being made by hostess any more than the union did.


Whether the same applies to Chase remains to be seen-- do you bank at Chase; and if not, given the story from the OP would you know consider switching to them to put, almost literally, your money where your mouth is?

Huge difference though in overseeing dissolution and voluntarily cutting bonuses through hard times, no?

[logroller]

Huge difference though in overseeing dissolution and voluntarily cutting bonuses through hard times, no?
Depends. If they were cutting bonuses to save jobs which aren't benefiting the business, I'd say they were doing their jobs poorly, and undeserving of bonuses.
If instead it were taking cost cutting strategies to stay afloat, then that's their job and they're doing it well and this an excellent way to attract and keep the best employees-- which should pay dividends. I'm not aware of their financial terms re:contractual bonuses, but assuming they are making a profit, I don't see why they wouldn't be able to have bonuses and keep their employees. But like I said, I don't know enough details to know which it is. But I do know those who are aware are likely the same people who include bonus packages and other financial incentives-- so whether or not the decisions are for the benefit of the business, I trust they'll get what they're due now or later.

[fj1200]

Unfortunately, paying top brass millions in bonuses while shedding workers has become commonplace. Hostess is playing its top execs big bucks to make the company go away. Big banks awarded execs huge amounts while accepting government bailouts.

Not quite sure how bankruptcy works are ya?

[tailfins]

Unfortunately, paying top brass millions in bonuses while shedding workers has become commonplace. Hostess is playing its top execs big bucks to make the company go away. Big banks awarded execs huge amounts while accepting government bailouts.

It comes down to how replaceable someone is. If a company is in a community of a million people, how many can fry a burger if they had to? How many could design an airliner? How many could keep track of 50 departments to make sure they each perform as needed and are properly coordinated and on task?

[Kathianne]

Depends. If they were cutting bonuses to save jobs which aren't benefiting the business, I'd say they were doing their jobs poorly, and undeserving of bonuses.
If instead it were taking cost cutting strategies to stay afloat, then that's their job and they're doing it well and this an excellent way to attract and keep the best employees-- which should pay dividends. I'm not aware of their financial terms re:contractual bonuses, but assuming they are making a profit, I don't see why they wouldn't be able to have bonuses and keep their employees. But like I said, I don't know enough details to know which it is. But I do know those who are aware are likely the same people who include bonus packages and other financial incentives-- so whether or not the decisions are for the benefit of the business, I trust they'll get what they're due now or later.

They are still getting bonuses, they chose to cut them in order to remain as healthy as possible, without lay-offs. They'd taken cuts since '09, but last year they voted to take 1/2 bonus. This year, they chose to take 1/3 of that. As I said, in the past few years, those cuts cost my friend's husband over $250k. No crying for him, his salary is fine. Bonus is still something I could probably live off for a year or more.

The thing is, he's only an 'associate director.' That's how they've been able to keep those below them, without loss of quality of service and loyalty to employees. Seems a good business model to me. Much better than the government's plans for business and their leaders.

I doubt very much if they were failing, they'd be bothering. Soon enough they'd all be out of a job.

[logroller]

Obviously I've not a clue to his total income, even best friends don't share that kind of info. The premise though, however it divides up is certainly better than what Chase did, no? Execs get less, workers keep job. No government telling them to do 'the right thing.'
That's too true. I remember a poll once that showed people were more comfortable talkin about their sex lives than their financials. Its a strange world we live in.
In defense of chase though, iirc, they're making money-- kicking the pants off citi and BofA. Citi is shat IMO--their (former?) CEO vik ram whatever, he's a sheister crook-- paid him out in a buyout of his hedge fund but reports he was working w/o comp unless he stayed until 2015. I'd shake his hand but only after using the restroom and before washing. BofA has decent service in my experience, but the countrywide mortgage acquisition screwed them. Tarp, well, that screwed everybody. Not equally, but nobody escaped that melee.

[Kathianne]

That's too true. I remember a poll once that showed people were more comfortable talkin about their sex lives than their financials. Its a strange world we live in.
In defense of chase though, iirc, they're making money-- kicking the pants off citi and BofA. Citi is shat IMO--their (former?) CEO vik ram whatever, he's a sheister crook-- paid him out in a buyout of his hedge fund but reports he was working w/o comp unless he stayed until 2015. I'd shake his hand but only after using the restroom and before washing. BofA has decent service in my experience, but the countrywide mortgage acquisition screwed them. Tarp, well, that screwed everybody. Not equally, but nobody escaped that melee.

Considering what they've done to customers and employees, they all suck.

At first feasible moment I'll leave Chase and go to another.

[Kathianne]

Considering what they've done to customers and employees, they all suck.

At first feasible moment I'll leave Chase and go to another.

How Chase 'got here' in my world. 30 years ago, I signed up with Gary-Wheaton Bank. It became Bank One, then First Chicago or vice versa. Then Chase.

[logroller]

How Chase 'got here' in my world. 30 years ago, I signed up with Gary-Wheaton Bank. It became Bank One, then First Chicago or vice versa. Then Chase.
I too ended up with chase after Washington mutual was acquired. Since switched to a local credit union for monthly checking/savings; also have a BofA checking account for mortgage. But when they all suck, it comes down to "what can you do for me". It's selfish, but what the hell. Still better than big bro making decisions