For the seven companies that received a government bailout, there will be a little less in their stockings this holiday. Kenneth Feinberg, President Barack Obama’s pay czar, began slashing salaries and eliminating year-end bonuses at the companies in October, but he made an exception for AIG on Monday, allowing a key executive to receive a base salary and bonus higher than agreed upon compensation limits.
The majority of the respondents to a BlackEnterprise.com poll might not be too happy about AIG’s seemingly special treatment. When asked if they would accept a year-end bonus had they worked as an executive on Wall Street, 55% of respondents said that they would not, because it is not fair to taxpayers. Twenty percent of respondents said they would take a bonus, but would have misgivings about taking the extra compensation. The remaining 25% said they would take the money without any reservations.
“I would prefer that the bonus money go to create more jobs,” commented respondent Alexis Johnson.
Bonuses are a key driver to competitive success, says Andrew Rauch, the CEO at ECI Companies, which advises community banks and businesses about developing executive compensation for their key people. He says that the bonuses are given as an incentive for the future and is not based on past performance.
“In recessionary times you want to motivate your employees to capture market share,â€ he says. Incentive pay is one of the key ways to help grow a business.â€
However, Dedrick Muhammad, senior organizer and research associate at the Institute for Policy Studies, disagrees.Â “These [Wall Street] CEO’s led their entire industry to over-leverage the entire economy on bad or unsustainable loans. It’s a culture of believing that they deserve profits and prizes no matter what their actions bring forward.â€
The results are in:
If you were an executive at a Wall Street firm that received government bail-out money, would you accept a year-end bonus?
— Yes, without reservation 25%
— Yes, with misgivings 20%
— No, it’s not fair to taxpayers 55%
BlackEnterprise.com conducted the poll between Dec. 14 and Dec. 21.