'When I use a word,' Humpty Dumpty said, in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.'
`The question is,' said Alice, `whether you can make words mean so many different things.'
`The question is,' said Humpty Dumpty, `to be master -- that's all.'
The refrain from Wall Street these days is "I worked hard for that bonus."
Lots of people work hard. Most of the people we know, probably many of the readers of this blog, could give lessons in working hard to these Wall Street whizkids.
A waiter or waitress works hard, very hard. But they don't get huge tips when they dump hot soup in the customer's lap.
You don't get paid for how hard you work, you get paid for how much value you add for your customers and your shareholders. If you work on commission and bonus your pay is intended to vary with performance, not by how much you can grab off the table before the police arrive.
The pay structure on Wall Street looks less like a profit based enterprise and more like organized crime.
What starts as a valuable component, a method of efficiently allocating capital for a small fee, becomes an oversized drain on the process it is intended to serve.
There is nothing wrong with capitalism and competitive markets and a healthy meritocracy. It is probably the most efficient and effective means of creating wealth and managing businesses.
We should try that system now that the cult of pay for privilege, interconnected frauds, rule by empty suits, and crony capitalism has failed.
For CEOs, thirst for bonuses may be in their DNA
31 Jan 2009, 1151 hrs IST
NEW YORK: Why do CEOs need extravagant perks even when they are firing staff and pleading for taxpayer bailouts? It may just be in their makeup, experts say.
It takes arrogance and narcissism to become leader of a Fortune 500 company. Those same traits, however, have become their undoing during the deepest recession in decades. (If their narcissism is particularly acute they might become a Senator instead - Jesse)
U.S. President Barack Obama has noticed, telling reporters on Thursday he was outraged by a New York State report that $18.4 billion in Wall Street bonuses were paid in 2008 as taxpayers rescued the crumbling financial system.
"That is the height of irresponsibility. It is shameful," Obama said. (And as recent denizen of Congress he has a refined palate for shameful irresponsibility, which has been the primary product from Washington DC in recent years. - Jesse)
New York State Attorney General Andrew Cuomo, who is investigating Wall Street bonuses, welcomed Obama's comments.
"While Wall Street melted down, top executives believed that, unlike the rest of the country, they still deserved huge bonuses," Cuomo said. (And Congress took increasing pay raises, and a private pension system, and superior healthcare, while the median wage stagnated and the middle class dwindled - Jesse)
For Bob Monks, a former executive who has written nine books on corporate governance, the reason is that the rich and powerful simply love their toys.
"It's a boy thing. Sort of, 'Mine's bigger than yours.' It's really childish," said Monks, a shareholder rights activist and the subject of a book called "A Traitor to His Class." (It is not childish, for that is a slander on children. It is pathological. It is an addiction, a compulsion, a sickness that transcends the occasional petulance of childhood - Jesse)
Monks related a story about flying on someone's corporate jet. The host was devastated when, upon landing, he saw that while he planned for a limo to be waiting at the airport another captain of industry had a helicopter take him to town.
"I thought my guy was going to die. ... It's entirely about people's self-image." (It is about a sense of personal worthlessness. Some people have a huge hole in the center of their being, and and a compulsion to fill it up with things and people, to try to make themselves feel whole, but it can never satisfies, and they are ravening - Jesse)
Longtime advocates of shareholder rights were handed a gift in November when Detroit auto executives flew to Washington on corporate jets to ask for billions of dollars in taxpayer money, sparking a public outrage.
More recently, it became known that former Merrill Lynch CEO John Thain spent $1.2 million remodeling his office last year, including $1,405 for a trash can. Merrill Lynch is owned by Bank of America, which consumed $45 billion of taxpayer money through bailouts.
Then on Tuesday, Citigroup canceled plans to buy a $50 million executive jet after a White House rebuke.
"People don't become head of Merrill Lynch without having a certain sense of self-importance. Once they arrive at that position, they have all kinds of toadies tell them what geniuses they are, then of course they begin to feel their lifelong feelings of self-importance have been confirmed," said Charles Goodstein, a psychoanalyst and professor at New York University School of Medicine.
Defenders of executive perks say generous compensation is needed to retain talent. (Generous, not extravagant. There is a direct proportion between the emptiness of the suit and the extravagance of the trappings. There are only a few Steve Jobs; most of the others are verbally adept, highly cunning, political animals. For the most part it is the myth of the "Great Man." A surprisingly large number of them are frauds. The problem is the system does not manage them, eliminate them. It pays for the office, not for the performance. - Jesse)
Sometimes it's jets but can also include home security systems, country club memberships, sports tickets and financial advice. The value of these benefits is considered income, so CEOs also sometimes get another perk: company help in paying their taxes. (Set the tax rates so bloody high that they might consider competing on something more useful, like the performance of their companies - Jesse)
"I was CEO of a bank once and it's not rocket science. You need the same skill set as somebody running a hardware store in a medium-sized town," Monks said. (For many corporate managers the most difficult of the job is protecting the business from overpaid corporate goons with nothing better to do than to subvert the good of the business to their own personal ends in some of the most imaginative ways possible. And in high tech startups, the most intractable problem is trying to keep the VCs from destroying the company with their clumsy attempts at stealing the business. - Jesse)
Steve Thel, a former lawyer with the Securities and Exchange Commission and now a professor at Fordham Law School, blames compliant board members who often come from the same privileged world and can get paid hundreds of thousands of dollars for attending a few meetings each year. (The Boards are bastions of the fraternity of empty suits and the brotherhood of professional courtesy -Jesse)
"It's endemic to the system. The last administration didn't think there was any structural flaw. Now across the political spectrum people feel that Wall Street executive compensation is out of control," Thel said. (The former president is the epitome of a thin veneer of privileged arrogance covering a deep well of incompetence. - Jesse)
He predicted Congress would pass legislation granting minority shareholders more say on pay and possibly introduce higher taxes on some parts of executive compensation.
"A year ago it was absolutely unthinkable that this would be heard in Congress," Thel said.