Bonuses Without Profit!? Wall Street, Listen Up!

By on

When it comes to Wall Street bonuses, you’ve probably been reading the same articles I have. The bottom line is that, despite the fact that most of the big Wall Street banks are only surviving courtesy of tax-payer handouts, the people who drove these businesses over a cliff, and had a hand in driving down the value of your home, are still raking in the big bucks.

Sure, you’ve seen a recent headline or two about this chairman or that CEO forgoing their 2008 bonus. Hopefully they didn’t squander too much of last year’s 30 million dollar bonus. But while bonuses may be down, they’re not out. According to an article I read today in Forbes, about 20 billion dollars was spread around New York City last month. And for an average banker with just 8 years on the job, the average bonus will be more than 600,000. In a year when many banks didn’t just lose: they had to borrow billions from us … from you and me … just to keep the lights on.

I’ve been thinking about how this could be possible, and I’ve come up with only one possibility: these New York guys, while obviously smart and well-educated, need a quick refresher in how bonuses work in the rest of the country. So grab your pencils and pads, banker-boys, and take some notes.

Here’s how it works. Let’s begin by talking about profits (because that’s where bonuses come from everywhere outside of Manhattan). Now think back to Harvard. Remember profits? That’s what you get when you bring in more money than you pay out. So just subtract the money your company lost from the money it made. And here’s the key, if it’s positive, you’ve got a profit. But if it isn’t, if it’s negative, you’ve got a loss.

Now here’s the next key point: a loss is bad. Why? Well, let me show you…

Because it’s a profit that allows you to reward those employees who helped create it. But if you’ve got an un-profit … a loss … you can’t pay a bonus because you don’t have any money to pay it with.

Now, you’re probably not going to pay attention to this … after all, I didn’t even make a million dollars last year, so what do I know? But if nothing else, at least you learned that if you expect to personally gain when your business loses…well, that’s only happening on one small island in New York. So don’t move anywhere else, ok? I’m Stacy Johnson, and that’s what I think.

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Check out our hottest deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,064 more deals!

Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Irene

    Stacy I loved your commentary. The average individual who is working for relative peanuts needs to have this hammered home–it's movtivation–people need to revolt somehow–we need change in the world of finance now.

  • Irene

    Stacy I loved your commentary. The average individual who is working for relative peanuts needs to have this hammered home–it's movtivation–people need to revolt somehow–we need change in the world of finance now.

  • Sher

    Stacy, PLEASE HELP ?? I just found out that an old debt that I paid off is still showing up on my credit report. I cannot find the letter and reciept where I paid it off. What can I do to resolve this issue ? Please my credit rating is 717 which is ok but I really want this taked care of.
    Thanks for your time. Sher

  • Sher

    Stacy, PLEASE HELP ?? I just found out that an old debt that I paid off is still showing up on my credit report. I cannot find the letter and reciept where I paid it off. What can I do to resolve this issue ? Please my credit rating is 717 which is ok but I really want this taked care of.
    Thanks for your time. Sher