Wall Street Bonus Pool for 2008 "Shameful and the Height of Irresponsibility."

On January 29, 2009, President Obama described the 2008 Wall Street bonus pool as shameful and the height of irresponsibility.  He apparently felt that a year that saw multi-billlion dollar government bailouts, staggering losses in the financial community and the demise of some of the most well known names in the banking community was no cause for celebration, much less payment of $18.4 billion in bonuses for a job well done. But 2008 apparently did not mark the "height of irresponsibility" as far as bonuses are concerned - the 2009 bonus pool increased by $5.5 billion (yes billion) over 2008.

As indicated in my blog of January 17, the culprit is the "all or nothing" concept in compensation arrangements especially in the investment banking community. The concept is so-called "asymmetric compensation," that is, very low base compensation, and potentially huge bonuses for accomplishing targeted goals. Since many investment bankers live well beyond what their meager base compensation could support, not achieving their bonuses is not an option. Accordingly, management can easily influence their behavior by agreeing to pay huge bonuses if what often turn out to outrageous goals are achieved, and then simply set out the ravenous hounds into the jungle to corral a pride of lions.

In The Bonus Tim Farley's formerly comfortable life becomes embroiled in just such a delemma when he takes on a hugh bonus deal for an oil company, but while he is desperate to achieve the bonus that can set him up for life, two powerful international groups threaten his life and his family's lives: one if he goes through with the deal, the other if he doesn't.