I Do Not Think "Capricious" Means What You Think It Does
More than 80 percent said they don’t believe that their compensation is mainly predicated on performance. Instead, [Capstone managing partner Rik] Kopelan said, young investment bankers worry that it’s “based on the profitability of the firm, based on how powerful the group heads were, based on capricious things.” [emphases mine]
Gosh, really? That would never happen in the real world.
So why are they so saddened?
One investment banker who participated in the survey described a breach of the “tacit understanding” that he or she would be well compensated.
I don’t know about anyone else, but if you try to use the phrase “tacit understanding” to get something valuable from an Investment Banking client, you will quickly find that you no longer have a client.
But the pain…
Considering “the sacrifice I make in my personal life (100-hour work weeks, canceled vacations, etc.), this business has to be more rewarding,” the person said, according to Capstone.
You hear a lot about people working 100-hour weeks. Some of it is true. The part that is left out is that those weeks are also filled with a company car home (and often to), meals provided on the expense account, and a guaranteed base salary with a bonus that (for those 100-hour a week jobs) generally runs north of 100% of salary. And that’s ignoring signing bonuses.
Note, by the way, that having a guaranteed salary does not make you an entrepreneur. Or a farmer. Or a store owner. Or a restauranteur of any type, from Tom’s Diner to The Quilted Giraffe. All of whom are also likely to be working 14+ x 7 without pulling what some glibly compare to McDonald’s wages.
What it does do is gives you an opportunity to move up in an organization, to develop your career, to peak out at compensation of, say, almost 3/4 of $1,000,000,000 in a year.
Not exactly on par with what a bodega owner or a farmer has a chance to make.
And, yes, comp may have dropped a bit since 2007. (I wonder why?) But starting comp is still rather high (PDF; keep in mind that the numbers shown are in Pounds, not Dollars; multiple by about 1.6).
The good news:
“Fewer and fewer plan on making it a career, because they’re working these long hours and not getting paid as well as they were.”
Gosh, what will we do with fewer people in Securities and Investment jobs?
Come to think of it, how popular is “intermediation” as a career choice since the End of the Reagan Era?
The punchline:
Last year, according to New York State Comptroller Thomas DiNapoli, Wall Street paid out $20.8 billion in cash bonuses, instead of the $22.5 billion a year earlier.
A mere $25-27,000 per person, sort of. But that’s cash alone—stock and stock options, for instance, are not included.
Don’t worry, though. I’m certain everyone who says “Do you want fries with that?” is also in line for $25,000 or so in bonus every year. That’s why everyone knows the phrase, eh?
when the bankers go to jail ee-hah
when the bankers go to jail
we’ll all be dancing in the streets
when the bankers go to jail
http://thepeakoilpoet.blogspot.com/2011/07/when-bankers-go-to-jail.html
I suggest reading this article by David Warsh:
http://www.economicprincipals.com/issues/2011.07.24/1278.htm
Or if really interested the book he links in the artivce.
http://www.amazon.com/Age-Greed-Triumph-Finance-Decline/dp/1400041716/ref=sr_1_1?s=books&ie=UTF8&qid=1311440548&sr=1-1
A bit more than beach reading, a good history of how Wall St and the fauning libertarian politicians evolved.
Throw in the golden cross of Calvin, and it is not capriciousness.
Oh the poor underlings, they really thought they were part of the family of Mortimer and Randolph Duke. Just as Louis Winthorpe III thought.
Idiots!
Poor investment bankers, complaing the same as teachers about unfair evaluation practices, perhaps they should join a union! Then we can push to have the traders go on strike, and the industry will discover that all the traders can be automated away!
The very most wonderful part of the whole whine was the implicit threat from the investment bankers that if they aren’t compensated better, they will stop working away doing what they have been doing. No no noooooo don’t quite your job and throw me in the briar patch.
I really doubt the veracity of anyone who claims to be working 100 hours a week. If they claim this, they are counting lots of what I call “grey” work – drinking beers with clients, travel, etc. From my personal experience, I don’t think anyone is very productive after about 60 hours a week on a sustained basis, or 70 hours in bursts. They might be able to mechanically push buttons and pull levers, but deep and innovative thinking is virtually impossible under such conditions. Studies show that error rates increase exponentially after about 40 hour weeks as well.
Chad,
I know people who were unable to have therapy outside of the office environment, requiring a session in office so to speak…too much happening to leave. No thanks. I am sure they found someone to have sessions with, but stupid. Of course, the rest of their lives were falling apart which was part of the pain. 100 hours of productive work is a crock but a wonderful backdrop to feel deserving of the money.
Hmmm…it is also established there was spending on drugs and prostistutes charged to company expense accounts during the prime boom times, and quotes from our leaders in economics that these were personal value matters….of course, Spitzer was nailed on personal matters. Worth some investigation if information is available.
On the behaviors suggested in the second paragraph, recall that at least some mortgage companies distributed uppers to mortgage officers to get more work out of them. I wonder if the robo-signers are given drugs also? Its all part of the boys club that investment banking is still. (As indeed are parts of the general sales business in particular business to business traffic)