If I received a year-end bonus of merely one normal paycheck, it would solve most of my financial difficulties. How can someone make a bonus that exceeds their already substantial salary, even when they are right out of business school?

--PunkDavid

http://www.nytimes.com/2004/12/28/business/28bonus.html

That Line at the Ferrari Dealer? It's Bonus Season on Wall Street
By JENNY ANDERSON

Published: December 28, 2004

Samantha Kleier Forbes, a 30-year-old real estate broker, was getting ready to leave for a vacation to Florida with her mother and sister when she got an urgent call. It was a client who had spent the summer scouring the Upper East Side of Manhattan for an apartment priced between $4 million and $5 million.

The client insisted on seeing more apartments that day, but now she wanted to look in the $6 million range. Her husband, a banker at Goldman Sachs in his late 30's, had just received his year-end bonus.

"Normally this time of year is dead," said Ms. Forbes, a vice president at Gumley Haft Kleier, a residential real estate brokerage. But this winter there is unusual buying interest that she attributes to rich Wall Street bonuses. She is cutting her end-of-the-year vacation short, so she can prepare for an onslaught of clients eager to see apartments.

The year-end bonus is a Wall Street tradition, and for a second consecutive year, the amounts are significant. Three major Wall Street firms - Goldman Sachs, Lehman Brothers and Bear Stearns - have reported record profits for the year and all are said to have given out handsome bonuses.

The totals in 2003 were already impressive: Lloyd S. Blankfein, the president and chief operating officer of Goldman Sachs made $20.1 million, of that only $600,000 was salary; and E. Stanley O'Neal, the chief executive of Merrill Lynch, received a bonus of $13.5 million and restricted stock worth $11.2 million on top of his $500,000 salary. At the other end of the compensation spectrum, an investment banking analyst right out of college would have made a $65,000 salary and a $35,000 bonus last year. An associate just out of business school might have made $85,000 in salary and a $115,000 bonus.

This year, investment bankers are expected to see gains in bonuses of 10 to 15 percent, amid a year-end flurry of mergers. Fixed-income traders, who have been the best compensated Wall Street professionals in recent years, will also be amply rewarded, but their percentage gains may be smaller than those of bankers. Bonuses, of course, vary by bank, by division and by individual. They reflect the firm's profitability and the group's performance, as well as the individual's contribution.

This year's bonuses do not quite reach the heights touched by star bankers and traders in the heyday of the late 1990's technology bubble. But they are rich enough to persuade many of Wall Street's elite to rediscover conspicuous consumption.

One senior trader is building a sports complex for triathlon training at his house in upstate New York. It will include a swim-in-place lap pool, a climbing wall and a fitness center. Another bought an Aston Martin. For some, upgrading real estate is the first order of business.

But many Wall Street professionals are urging caution, given that the bonus typically constitutes the majority of their compensation. More than a dozen bankers, all of whom would talk about their spending only on the condition of anonymity, said they were all too aware that the good times could end as quickly as they did after 2000, when a $2.5 million income could turn to $800,000 overnight. [cry me a motherfucking river ]

"Given the last two to three years when people figured out that this business is pretty volatile, they are going to try and bank a lot of their bonuses," said one managing director at a firm where bonuses have been announced. "They've seen too many people laid off and they realize they can't just spend all their money."

It should be noted that this same banker just bought a $150,000 Aston Martin to park in his garage in Greenwich, Conn.

Another senior banker at a different firm, who is set to receive a $2.8 million bonus, said he had bought his wife a mink coat and was planning a weeklong skiing vacation out West. But he also said he intended to save most of the money. "We're not buying homes or boats, we're not spending on the big things," he said. "We are more relaxed and generous on the small things."

Of course, small is in the eye of the beholder. While the Maybach, an exclusive line of luxury cars made by Mercedes-Benz that starts at $315,000, appears on the wish lists of many bankers, relatively less expensive models from Aston Martin, Bentley and Maserati have also been popular. Michael Parchment, general manager for Miller Motorcars, a luxury dealership in Greenwich, said demand had been soaring.

"It's probably up 20 to 30 percent from the same time period last year," he said. "Unfortunately, production isn't up." The result, he said, are some unhappy bankers.

Wall Street bonuses are expected to total $15.9 billion in 2004 - second only to $19.5 billion in 2000- according to Alan G. Hevesi, the state comptroller of New York. In 2003, bonuses totaled $15.8 billion. Mr. Hevesi said bonuses of that magnitude were "good news for New York."

"It's all taxable income and it means that folks have more disposable income so they will spend money," he said.

Bonus season is always a particularly angst-ridden time for Wall Street. Managers haggle for more money for their employees, divisions fight for a bigger piece of the pie and bankers try to portray themselves as indispensable. In the end, few admit to being happy, at least to their bosses.

"We used to say there's no amount of compensation that amounts to people saying thank you," said Roy C. Smith, a former Goldman Sachs partner who is now a professor of finance at New York University. "They are either sullen or mutinous, but never quite happy."

Midlevel employees did especially well this year. Three senior-level managers at Wall Street firms said that the people who were enjoying the biggest percentage increases over all were second- and third-level associates and junior-level vice presidents.

The ranks of those managers had been thinned after the stock market bubble burst. But this year, a reinvigorated market meant there were too few associates and managing directors to put together client pitches. At least three banks had to guarantee bonus increases of 25 to 50 percent to prevent defections to other firms. The result is that a third-year associate who might have made $200,000 in income last year could receive $350,000 this year.

The manager with the Aston Martin said that last year's compensation packages for associates were ridiculously low. "You had third-year associates making $210,000 to $225,000; a lot of these guys are married and have young kids and they are working" very hard, he said. [*thinks about how hard President Bush has been working*]

Many of those associates are expected to use their new wealth to pay off debts incurred from three years of relatively meager bonuses.

But real estate will draw, as usual, a significant portion of the bonuses.

"Usually we get five phone calls a week," said Richard Steinberg, a managing director at Warburg Realty Partnership who shows apartments priced from $10 million to $20 million. "Since bonuses, we've gotten double that from hedge funds, Wall Streeters and money managers. I've gotten more phone calls since Dec. 15 than from any other year."

Late-night entertainment may also benefit from the rise in bonuses, given Wall Street's reputation as something of a boys' club.

"Certainly the Wall Street crowd is very special to us," said Lonnie Hanover, a representative for Scores, a high-end strip club in Manhattan. "December is an amazing month for our business, but it's everything, it's Christmas bonuses, Christmas spirit. They have their official parties and then the unofficial party here."

Even the cautious are probably going to treat at least part of their bonus as play money.

One senior investment banker at a big Wall Street firm said he was putting this year's money "directly into the bank."

"I have a sailboat, a motor boat, an apartment, an S.U.V.," he said. "What could I possibly need?" After brief reflection, however, he continued: "Maybe a little Porsche for the Hamptons house, but probably not."

It's time to put the fear of Government into these people.

*begins prepping resume for Goldman Sachs*

"I'm in murders and executions."

--PunkDavid

It's quite something isn't it?

My buddy is one of those that got a huge 6 figure bonus that outweighs his annual salary.......It's a hell of a line of work to be in..My wife is in management with a huge private investment firm

it is nuts, but we'll take it

Does this happen anywhere but New York?

My mind simply can't grasp what contribution these people make towards society that justifies them making this kind of money. They help people invest the extra money they have, and turn it into more extra money. Maybe that invested money goes into the capital that helps another business grow and therefore helps it's employees and customers. But in reality, Wall Street firms don't invest in small businesses. They invest in banks that loan to small businesses maybe. I wish I understood high finance better. It just seems to me like people lending money to each other, manipulating numbers and claiming profits.

I work in real estate. Realtors generally make their money by taking a percentage of the sale price (6% is pretty normal). When they sell a house that costs $150,000 that equals a commission of $9000. I consider that a lot of money, but there is a lot of time and energy invested from start to finish on a sale, and they have good months and bad months, so the money has to last through the dry periods. But if they sell a house that costs $750,000 they're making $45,000 and they have done NO MORE WORK than they did for the $150,000 property. What justifies that money? Nothing. As the attorney, I get paid by the hour. The sale price is irrelevant, only the complexity of the deal, and how much time I put into it.

It just sickens me. So many people make huge amounts of money based simply on the fact that they are working AROUND huge amounts of money. They collect the crumbs off the table of the people who are TRULY doing business, and if there was a big meal, they get more crumbs. This cannot be justified by saying "that's how capitalism works". I can accept the rich man investing his money, buying and selling to make profits. That is capitalism. All the little facilitators who make money based on the size of the deal they facilitate are not paid for what they do, but for WHOM THEY DO. They're whores, pure and simple.

--PunkDavid

It's because they essentially really work on commission.

They keep the salaries *cough* relatively low *cough* for those types of jobs. You make your money in your bonus, essentially because your earnings are tied to the earnings of the company and the investors. If you make good decisions and it pans out, everyone does extremely well, if the market sucks, so do the bonuses relatively.


what pisses me off most about CEO's is that they get their bonus either way.

Delta for instance. Profits suck, the company takes a big hit and lays off all kinds of people mostly at the bottom. The CEO pockets 9.1 million.

That's just wrong.

If the company tanks, the people at the top should feel it just as hard as the people at the bottom, that never happens, and it probably never will.


What's that old saying?

"You gotta have money, to make money"

get into corporate real estate PD, or move to NY where apartments are 5 to 6 million what's 5% Commission on that?

I hate rich people.

I can accept that. Working on commission is scary. I had an opportunity to do it earlier this year, but I wouldn't risk it. Still, even if I kicked ass at that job, I would be nearly impossible for me to make six figures.

Now I haven't lived in New York for a few years, but I have plenty of friends there. One of them is a patent attorney living and working in Manhattan. He's got four years of experience in a field that is very specialized and not every attorney can just choose to get into patent law (you usually have to have BS in a hard science or engineering, and pass a special exam). He is just now making six figures for the first time, and while he's by no means rich by New York standards, he isn't wanting. What can you do with $175,000 per year when you're 27 years old other than tuck it away or fuck it away?




Like I said, I have no problem with people who have money making more money. That's capitalism. They are the owners and unless we're willing to eliminate private ownership, that is how the economy is going to run at it's most basic level. I have a problem with the leeches on the rich. Those who supposedly work for a living, and yet are not paid based on their work itself, but on WHO they work for.

I am getting into corporate real estate in my new job. The deals are more complex, the attorneys get paid more. But I still get paid on WHAT I DO, not based on how much money my client makes on the deal.

It offends me that so many people consider attorneys to be leeches who live only off the misery of others. We aren't leeches, we're flies on shit. We do the WORK of cleaning up the shit that people leave all over the place. And there's no commission on eating shit.

--PunkDavid

It's crazy that $175 grand is not alot of money here especially if you are "new" to the city....

I feel the same about poor people

I used to work for State Street Corporation. One year I was there, the new CEO, who earns about $3 million a year in salary and other earnings, took got an extra 3 million dollar for a bonus. That same year, about 1000 people were laid off. And the xmas bonus for the average employee was nothing but a box of chocolates.

The next year, they were merging with Deutsche Bank and decided to further downsize their employee payroll. This time, instead of layoffs, they gave everyone in the company the option of voluntary leave. They hoped to have 1800 take the leave package. 3100 people took it, including me. I had only been there 2 and 1/2 years, and I got 3 months' salary. A lot of people like me had decent jobs but just hated the company. Anyway, now I work for a much smaller financial empire, and they treat their employees great.

It could be worse I guess, you could be a new attorney in Sri Lanka.

Talking with a friend the other day he was telling me of a guy that is making ridiculous amounts of money cleaning grease traps and the like once a month for various businesses. Aparently cleaning up funeral parlors is the worst. He's charging something like 5 or 10 K for a half hour of work and essentially they have to pay it because it has to be done and he's the only guy willing to do it. It's dirty, nasty and disgusting, but I'll do about any kind of work for 5 K an hour eh?

It has been said a wise man is a man with MD or PHD next to his name.

I say the true genius is the man that's discovered how to make a good living fishing.

Oh the many things that make us think "What the Fuck?"

I work in social services...if we get a bonus, it is usally something like $100, but with republicans in office, we get zilch. Not that I am complaining (except about the republican thing) because I would much rather see the $ used to help my clients, who can't earn a 6 figure bonus themselves because they are mentally challeneged and do piece work.

I see so much waste in this world, and so many people who would be happy to have an extra $5 per week.

Haha, this could very well be PD's quote of the year.

As for the actual topic at hand....eh, I'm just not feeling outraged about it.

Figures, you greedy fucker.

Exactly. How could I be mad about this? One of my best friends works for JP Morgan in NYC and I'm sure he gets a nice bonus too. But there is no way in the world I could live in NYC and work the hours he works each week. He works from 8am to 9 or 10pm Monday - Friday.

I had the opportunity to make a great salary and recieve a bonus for each house I got approved, but all that money wasn't worth it for me. Why would I want to slave away working ridiculous hours each week when I can make a decent living and working 40 hrs a week.

We each make our own choices and to each their own...