Thank goodness Goldman Sachs paid its co-presidents $106 million between them for their first year on the job. It works out to $53 million each. If only everything in life could be as fair as the directors who made this even-handed award.
I say thank goodness because it is close to a sub-atomic physical certainty that if they had paid these fellows, say, $43 million each, they would have made a sad clown face. At $33 million, they would have thrown a hissy fit. And at a mere $22 million, they both would have sunk into a deep depression and probably spent the next several months in their pajamas all day long.
The sums being awarded on Wall Street are like candy being handed out by children in a candy store. They have no connection to reality and do not know when to stop. You can see the same culture at work in the huge amounts (and fees) going into private equity deals where there seems to be no restraint either. You can hear it in the constant talk, driven by fund managers and investment bankers, about how the world is awash in money with no limits as to the size or number of deals. Most people have no problem with compensating CEOs and top management well. And Goldman Sachs has performed in a stellar fashion. In a market such as this, it would take some concerted effort to not do extremely well. It is a question of proportion and sound judgment that is at issue.
We have discussed previously Goldman Sachs’s bonuses here.
Some of us have seen this picture before. It is the kind of misguided thinking that leads certain people to believe that the laws of economics and physics have been suspended. It generally occurs just before a major economic downturn and a sudden plunge back into reality. Little children know about it. They understand that when the cartoon character goes off the ledge and seems to be hanging in mid-air, he will surely fall to earth with a thud as soon as he looks down. It’s just one of the immutable laws you learn as you grow up.
If kids and cartoon characters understand about reality, why don’t CEOs and compensation committees?