Sunday, September 21, 2008

Weird incentives

Lehman Brothers may have gone under, but at least the suits will still get their bonuses, totalling US$2.5 billion:
The $2.5 billion had been accrued as part of the contribution to Lehman’s group profits for the first nine months of the year. Barclays said there is no obligation to pay it out but analysts say the competitive pressure to keep key staff means he will have to.
Over at the Irish Sunday Business Post, corporate bonuses are inspected further:
Wall Street bonuses hit $23 billion in 2006. On the back of those record performances, huge bonuses were paid to top executives in the US, Britain and elsewhere. In 2006, there were 4,000 bankers in the City of London who received bonuses of over £1 million.

Martin Sullivan, the former chief executive of AIG, which received an $85 billion bailout from the American taxpayer last week, earned $40 million between 2005 and 2006. He received a severance package of $47 million and his resignation took effect from July 2008.This is despite the fact that AIG has lost over $20 billion on sub-prime writedowns after insuring over $57 billion-worth of financial instruments linked to sub-prime mortgages.
It's a funny old world.