white men with money

For the Second Year in a Row, CEOs Say ‘Thanks But No Thanks’ to Bonuses

Bank of America’s outgoing CEO, Ken Lewis, “volunteered” to give up his bonus for 2009. Goldman Sachs CEO Lloyd Blankfein, fearing the masses might come for his head like he used to fear getting off the bus in the Bronx, announced last week that he would take his bonus in stock. Citigroup’s Vikram Pandit has pledged to take a $1 salary until he “makes Citi sing,” so basically until the end of time. And today John Mack, the outgoing CEO of Morgan Stanley, said a Sarah Palin–like “Thanks but no thanks” to a board-approved bonus, owing to Morgan Stanley being down by 50 cents. “It’s going to be the trend,” executive headhunter Jeanne Branthover told Bloomberg. “The top echelon is going to either forgo bonuses or take them in a non-cash way, deferring them. That is going to be very much the standard for this year because of everything that happened.” But why?

Last year, top executives at financial firms had to forgo bonuses: They had all suffered huge losses, and were all holding billions of dollars in TARP money. This year, most of the survivors have paid back or are in the process of paying their TARP money, and some of them, like JPMorgan and Goldman Sachs, are making money hand over fist. So why the Big Sacrifice? Is it really just to appease us, the populace? We asked an insider at a large financial institution we will not name* for their thoughts.

So what do you think? Will John Mack’s selfless gesture today cause a trend? Will any CEO at a major financial institution take a bonus this year?
John Mack did the right thing. Shit, he might as well get used to not being paid now, since he doesn’t have a future there. But not sure about the trend. [JPMorgan’s] Jamie Dimon has nothing to apologize for. Neither does Lloyd Blankfein, although he sort of can’t take a bonus. Not even Lucas van Praag could spin that. Vikram Pandit is probably asking his board right now whether he can have Mack’s money, but will have to settle for tax breaks and devalued stock instead.

What about Jamie Dimon, actually? Business is booming at JPMorgan, and he hasn’t been vilified like Lloyd Blankfein. Is he going to relinquish the cash, just because everybody else is doing it? Or is he going to be a man and be like, “Screw it, I’m going to take what’s mine, because that’s how capitalism works, bitches”?
I think he has to do deferred stock or decline a bonus altogether. No reason to squander the goodwill built up. JPMorgan has so far avoided the Goldman stuff, and rightfully so, but it only takes one or two stories to undo that. And just remember, JPM stock has a lot of upside. So if Jamie cashes out in five years and the stock is at $80, he’ll get to wear the halo and be able to afford a few million more.

Speaking of the halo: In their canned statements, these guys all seem pretty Zen about the fact that they’re having to give up millions of dollars they definitely believe they earned. Is that just an act? Are they secretly stomping around, completely pissed off?
I’m sure they’re pissed about it. Basically, these guys have always been the smartest dudes in the room forever, and now they’ve got to listen to the weaselly demands of shareholders and government officials. Remember Al Gore sighing during debates with George W? Like, “I can’t believe I’ve got to respond to this ass.” It’s kinda like that. Or better yet, it’s like trying to defend to a 3-year-old why I have to go to work instead of spending time with her without getting into the macroeconomics tying my job to her Christmas presents. Just blank stares and complaints in return.

So how long do these guys have to wear hair shirts? Will they ever be able to pay themselves huge-ass amounts of cash money at year-end again, and if so, when?
It’s less about time and more about conditions. When people have jobs again and money in their wallets and stop getting foreclosure notices and BOA lowers their credit card APR under 20 percent, then Vikram Pandit can buy himself a boat and [AIG CEO] Robert Benmosche can go back to being cantankerous from some Swiss chalet.

So basically, when we all stop paying attention again?

*No, it’s not the guy working at the Starbucks in the World Financial Center. Trust, jerks.

For the Second Year in a Row, CEOs Say ‘Thanks But No Thanks’ to Bonuses