×

Is It Time to Can Wall Street Bonuses?

There are three basic drivers in getting people to read business news stories: fear, greed...and hate.

Right now, hate is a biggie. Our story about President Obama calling Wall Street bonuses "outrageous" yesterday lit up our traffic charts. Indeed any "bonuses gone wild" story these days...for our site and I imagine our business-news and general-news competitors...gets lots of readership.

For business journalists, though, the issue is a tempered one. Sometimes you can get a really good story out of a CEO getting a huge bonus for driving a company into the dirt. But for the most part, bonuses are just regular part of the Wall Street landscape—there for incentive and tax reasons. But for people not used to the world of return and risk, the system seems out of whack.

But consider sales folk working on commission. No one complains about a guy making a good paycheck selling suits at Nordstrom. But doing stock deals on Wall Street? The numbers can be incredibly large...even outrageous.

General news outlets tend to make hay out of that. To a certain extent business news outlets do too...although we run our fair share of contrarian stories pointing out the reasons for such a system.

It's probably fair to ask if bonuses are too large given what's happened in the Wall Street world lately. But should we can the system altogether? What do you think?

Doesn't anyone report good things that companies do, such as Wall Street companies still giving to charitable organizations? —Natalie

Most of you don't get it. For the MOST part "bonuses" on Wall Street are not bonuses, they are just defered salary. Not a single person on Wall Street would ever work for the base salary. That's because base salaries are VERY LOW and have been artificially capped for years by companies. —VS

What a bunch of crybabies. The same people who have lost billions of dollars for their companies, and trillions of dollars of wealth for the economy still think they are entitled to a bonus. —Les

Not all people on Wall Street receive huge bonuses. Most people on Wall Street receive moderate bonuses, which do not increase significantly in good times but do decrease drastically in bad times. —Chris

No, don't can the bonuses, but bonuses should be incentive for above and beyond performance. —Robert

I have no problem with bonuses, just don't come asking for a tax payer bailout the same year. —Greg

If private business want the taxpayers to bail them out, then they can forget the bonuses. It is shameful. —Frank

If a company din't borrow money from the TARP then the Govenment should not get involved. —Adam

Getting bonus is a fair deal in good times. But crying for bonuses in a crisis time is certainly unfair. —Monti

Bonuses should NOT be seen as entitlements. Executives should not get a bonus for just doing their job but for going above and beyond to add value to the company and shreholders. —Joe

If your company lost so much money they had to go begging to the government for a handout, then I'm sorry—you shouldn't be receiving ANY bonus of any kind. —Brian

Why reward people for doing a bad job? —Richard

Absolutely not! However, the definition of a bonus needs to be revisited. If a company's performance is declining, a bonus should obviously not be given! —Jeremy

The system needs major revision. It is not the bonuses themselves as much as the amount. —Jim

As a former investment banker, I feel compelled to clarify that if there are no bonuses, Wall Street would not be able to attract top talent... —Reza

Businesses should be able to pay whatever bonuses they wish. Government should simply insure that all bonuses are taxed at an appropriate level. End of story. —Shawn

Although I agree with President Obama's anger over the bonus issue, one has to understand that this is simply the way investment banks work since it's so commoditized today. That is, they have to pay their top bankers simply to retain good talent, otherwise they will leave. —Shrikant

The word bonus needs to be eliminated. The word gives the impression to people that wall streeters are being given a gift. They are not. "Bonuses" are compensation for an entire year of work. Workers are paid a small salary throughout the year... —Lucy

I think that the root of the bonus system is well founded if certain basic rules are applied. First, bonuses should be distributed to all company employees, not just the top brass...Second, payout of bonuses should be contingent upon the level of profitability...Lastly, there should be a cap on the amount of bonus payouts to preserve the longterm health of the company. —Rob

Bonuses encourage too much risky behavior. —Arnold

I am fine with $18 billion in bonuses being paid when the market is growing and the world economy is benefiting, but it is nothing but stupid to pay these people additionally when they've FAILED at their jobs. —Phil

The bonuses are high, but some of the companies really deserved them...—Rodrigo

Bonuses are the mechanism used to encourage managers to act in the best interests of the firm and its shareholders. If managers are only paid on a salary basis, the only incentive they have to act in the best interests of the firm is the threat of a pink slip. And in my opinion, a carrot is better than a stick. Alternative carrots would be the only way I'd agree to a canning of bonuses. — JPNH

Yes, corporate bonuses are way too high at any time. How much money does one person need and at what expense of millions of other people? — Roger

I'm not getting any bonuses right now because our profits aren't there, so they shouldn't be getting bonuses either. Bonuses are supposed to be for when times are good and the company is doing well. You should never count on getting a bonus. — Tabitha

I'm not sure if the system of granting bonuses should be totally canned, but I do take issue with the argument that if companies don't provide these kind of outsized bonuses, they'll lose their "best people." — Chris

In Europe, they don't give bail out money unless, they waive their bonuses. Why don't we do the same? — John

I have yet to hear a rational basis for rewarding people who do a bad job. Theoretically, bonuses encourage good performance, but if a person gets the same bonus for screwing up as he/she does for excelling, what's the point? — Joan

Of course Wall Street could survive. It wont cease to exist if bonuses go away. But what will happen is the talent will go elsewhere... — Dennis

Why is it people hate Wall Street execs who receive bonuses from private dollars but praise politicians who give themselves raises with our money? — Fred

Stop blaming Wall Street for this so called crisis—how about some blame on our US Govt.? — Bill

It's time to make bonases based on performance. — Garnet

It is immoral, insensitive, shameful, and outright wrong for Wall Street companies to dish out bonuses to CEOs in this day and age. I am severely dissapointed in Wall Street's actions. I cannot express my anger at what stupidity is going on and how CEOs can even get bonuses. They should be getting a severe pay cut. Why should CEOs be getting bonuses when hundreds of thousands are losing their jobs?? — Sachin

...It is a sad day in America to see the Democratic party trying to destroy the American dream of success. — Mark

Since when does public opinion rule how private businesses are run? How far into a private business, those without need of government bailout, be ruled by an elite of politicians? Once the banks are run by the government, we all lose our freedom. — Ron