I believe you meant "breathe" Notwithstanding, typically only the fiduciaries are paid in restricted-stock. 99% of ibank bonuses are paid in CASH.
That's not true. For most ibanks, EVERY employee is forced to take some stock options aka golden handcuff. The more senior you are, the higher your stock/cash ratio is. For example, an average joe at an ibank's bonus each year: cash + unvested stock (company stock that will be awarded to you after x years ) + 401k company stock + employee stock purchase program (use bonus to buy company stock at 25% discount, optional but most employees do it). When all said and done, it's usually 60% cash, 40% stocks. And most of the 40% stock you cannot sell for years. The senior guys have a much lower cash ratio. ------------------- I think feds bailout is the right thing despite all the anger. Again it's all about counterparty risk. If bsc fails, all of its i-owe-you issued to other banks will drop to near worthless, those banks then are forced to take more big writedown, this process will then cause more banks to fail, then their papers become worthless too, etc...with potential to trigger a complete meltdown. If that does happen, it's not only the big guys that will be hurt, EVERYONE will be hurt badly. Bear stern is not some hedge fund or regional bank, it's the FIFTH largest ibank in the us!! its counterparty risk is very significant. Feds did the right thing to prevent this become a possibility, yes it hurt a lot of people in the process, but i think it's the right decision. JPM obviously was just in it for the profit, cant blame them for that, that's corporate america. The only people i would blame is bsc senior management for being so incompetent so long and caused all of this. Batman28, do you work for bear stern?
The cash portion dramatically exceeds stock for non-officers. As an example, a good fried of mine is a pharma/biotech analyst at a wirehouse and his bonus was 100% cash.
It's that damn bastard Cayne's fault! Freakin Nero playing cards while the store was burning! What does he care how much he lost - he already has enough for easy street for the rest of his old-fart life! He screwed over everybody at Bear!
i guess it's different for each firm. i have first hand experience and friends in other top 10 ibanks all have similar bonus pay structure. regular salary is 100% cash minus whatever you put into 401k. But for bonus, stocks are always a big part of it. For example, lets say 50k payout. 7.5k is unvested (15%), 5k 401k (10%), 5k espp(10%) leaves ~33k cash, then after taxes, about 20k.... every year you are happy at the bonus #, and sad at the actual cash received afterwards heh...it's always about 50% of the actual bonus #..without fail..
"it's all about counterparty risk. If bsc fails, all of its i-owe-you issued to other banks will drop to near worthless, those banks then are forced to take more big writedown, this process will then cause more banks to fail, then their papers become worthless too, etc...with potential to trigger a complete meltdown. If that does happen, it's not only the big guys that will be hurt, EVERYONE will be hurt badly. Bear stern is not some hedge fund or regional bank, it's the FIFTH largest ibank in the us!! its counterparty risk is very significant. Feds did the right thing to prevent this become a possibility, yes it hurt a lot of people in the process, but i think it's the right decision. JPM obviously was just in it for the profit, cant blame them for that, that's corporate america. The only people i would blame is bsc senior management for being so incompetent so long and caused all of this" Wait a minute! What youre saying is that all these banks got us ALL by the shorthairs. If they screw up big they drag all of us down with them! AND WE GOT NOTHING TO SAY ABOUT WHAT THEY DOING!! I didn't sign up for that! Who the f*** is watching them to make sure they don't bet all OUR money at the roulette wheel on 36 black??? And if we bailing them out through the Fed, are we all getting JP Morgan stock for paying for it?
There's altogether too much high finance and not enough REAL WORK being done here. Time to send the pretty boys to farming school and machine shop and not Whartons.
Its misinformed comments like these that make me cautious about Jim Roger's other predictions, no matter how correct they have been. He just doesn't seem to understand that its customary for banking bonuses above a few hundred thousand to be paid almost entirely(90%+) in stock options. These options normally are restricted for 3-5 yrs, so no matter how big the bear stearns bonuses were, and I had heard they were a bit on the low side, they are almost entirely worthless now.