Deja Vu

Bonus Babies

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captains of industry,

commerce,

Merrill Lynch,

New York City,

Wall Street

“Thain's Bonus, (S)Mack’d,” Condé Nast Portfolio Online, Dec. 8, 2008.

Well, that didn't take long, did it? John Thain experienced a perfect storm of negativity over his $10 million bonus request from Merrill Lynch's board of directors today: one well-placed leak in the Wall Street Journal, an incredulous reaction by New York attorney general Andrew Cuomo, and a bonus concession by Morgan Stanley chief executive John Mack.

Thain started the day hoping for a bit of spending money to help get through this recession. He ended it with an agreement to take zero instead, the Wall Street Journal reported. Four other top Merrill executives will also go without the extra few million this holiday season.

Thain reportedly "requested" that he not receive a bonus, despite plenty of support from commentators and bloggers today who argued he earned it by averting a bigger crisis with the sale of Merrill to Bank of America. Not surprisingly, Cuomo's opinion throws a bit more weight around inside boardrooms than that of the blogosphere.

No one, it should be noted, argued that John Mack has earned such a reward this year. Mack, who has now agreed not to take a bonus for the second consecutive year, managed to keep Morgan Stanley alive by allowing it to become a bank holding company. But in his shareholders' eyes that doesn't quite justify a bonus when Morgan Stanley stock is down 70 percent this year.

Liar’s Poker (excerpt), by Michael Lewis, 1989.
As a bond trader for Salomon Brothers, Michael Lewis’s salary in 1986 was $45,000. His bosses then revealed his December bonus to be an additional $45,000.

Bonus day, when it arrived, was an enthralling reprieve from my daily routine of chatting with investors and placing bets in the markets. Watching the faces of other people as they emerged from their meetings was worth a thousand lectures on the meaning of money in our small society. People responded in one of three ways when they heard how much richer they were: with relief, with joy, and with anger. Most felt some blend of the three. A few felt all three distinctly: relief when told, joy when it occurred to them what to buy, and anger when they heard that others of their level had been paid much more. But the look on their faces was always the same no matter what the sizes of their bonuses: they looked sick to their stomachs. It was as if they had eaten too much chocolate pie.

Being paid was sheer misery for may. On January 1, 1987, 1986 would be erased from memory except for a single number: the amount of money you were paid. That number was the final summing-up. Imagine being told you will meet with the divine Creator in a year’s time to be told your worth as a human being. You’d be a little edgy about the whole thing, too, wouldn’t you? That’s roughly what we endured. People felt a wave of pure emotion waft over them immediately on the heels of a year of single-minded pursuit of success, and it made their stomachs churn. Worse, they had to hide it. The game had to be played. It was rude to gloat too soon after being paid and embarrassing to show anger. The people who had it best felt unpunctuated relief. They had been paid pretty much what they had expected. No surprise. No reaction. Good. That made it easier to seem impassive. It was over.

My own compensation meeting was late in the day. I met with my jungle guide, Stu Willicker, and the sales manager of the London office, Bruce Koepgen, in one of the Gone with the Wind dining rooms. My jungle guide simply listened and smiled. Koepgen, said to be destined for greatness at Salomon Brothers, spoke for the organization.

I’d like to say I was as cold as calculating as a hit man facing a Mafia don after the job has been done. But that just wouldn’t be true. I was more on edge than I had expected. All I—or anyone else—really wanted to know was the size of my bonus. But I had to sit through a much longer speech, for reasons I didn’t at first understand.

The managing director shuffled some papers in front of him, then began. “I have seen a lot of people come through here and shoot the lights out in their first year,” he said, then named a few young managing directors as examples. “But I have never seen anyone have the kind of year that you have had.” He began to list names again. “Not Bill, not Rich, not Joe,” he said. And then: “Not even [the Human Piranha].” Not even the Human Piranha? Not even the Human Piranha!

“What can I say,” he said, “but congratulations?” He spoke for about five minutes and achieved the desired effect. When he finished, I was prepared to pay him for the privilege of working at Salomon Brothers.

And I thought I knew how to sell. The boss put my small abilities to shame. He pushed all the right buttons. Most of the cynicism and bitterness I was developing for the organization melted. I felt deeply reverent about the firm, my numerous bosses, John Gutfreund, the AT&T trader, and everybody who had ever had anything to do with Salomon Brothers except perhaps the opportunist. I didn’t care about money. I just wanted this man to approve of my performance. I began to understand why they gave you a talk before they give you money.

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