It was just yesterday that we saw the WSJ’s impressive effort tracking down the bonus babies at Merrill Lynch, who got more than $10 million each in 2008 while their firm lost $28 billion.
Yesterday, the New York Attorney General subpoenaed seven of these* executives to help his investigation into whether the bonuses were illegal. Today the Journal takes a deserved victory lap on C1.
This is what can happen when the Journal throws its weight around and regulators, you know, regulate.
UPDATE: The WSJ’s Deal Journal blog has a very interesting post on Andrea Orcel, one of the seven* mentioned above, who got a $34 million bonus last year, claiming he raked in $550 million in investment-banking fees for Merrill.
Heidi N. Moore’s eyes popped at that amount, so she runs some numbers and finds that even if Orcel had been lead adviser on every one of the top ten deals last year, that would only have brought in $337 million. (A technical quibble: Why doesn’t Deal Journal have bylines on their posts?)
(* corrected from original version, which said eleven got subpoenas)
Ryan,
As a former WSJ reporter yourself, do you have any thoughts on whether we could be in a different national economic condition if the Journal had been this investigative and skeptical for the past two or three years, rather than just the last few months?
-Aaron Street
#1 Posted by Aaron Street, CJR on Thu 5 Mar 2009 at 05:46 PM
Following up on your reply from a couple of days ago about compensation, I like your idea that if everybody were on the same boat it would encourage them to keep an eye on the risks their colleagues take.
At the end of the day, however, I like lots of ideas and am not equipped to pick one. Nor would one system work for all occupations in a bank or all banks. Compensation is a complex subject. Politicians and the public are no more equipped to deal with this issue than they are with how many ATMs banks should put up or what the bank's logo should be. Pay, while about as important, is infinitely sexier, so it gets an undue amount of (often counterproductive) attention.
It should be shareholders that ultimately benefit or suffer from good and bad compensation schemes, respectfully. The government, as a new, large debt-holder, should concentrate on empowering shareholders and aligning their interests with tax-payers'.
#2 Posted by Chris Corliss, CJR on Fri 6 Mar 2009 at 11:43 AM