During the 5 year U.S. Housing 'BOOM' from 2003 to 2007, Wall Street's 5 Largest firms (Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Sterns and Lehman Brothers) paid their Top 5 Executives a total of more than $3 Billion in compensation!
Three BILLION dollars is of course a stunning amount of money in ANY context but especially so when considering the rather
DIRE solvency/financial challenges these same firms have faced over the course of the past 6 months...
NAMELY:
* Bear Sterns (the artist formerly known as BSC) was forced into bankruptcy in March
* Lehman Brothers (the artist formerly known as LEH) was forced to declare bankruptcy in September
* Merrill Lynch (MER), in order to avoid being forced into bankruptcy, was forced to sell itself to Bank of America (BAC) in September
* OH yeah, don't forget about that little $700 BILLION Wall Street 'Bailout/Rescue Plan' that was just approved by Congress this weekend !
---------------------------------------------------------------------------------
According to the informative Bloomberg article linked below:
* The 5 Wall Street firms had combined Net Income (profits) of $93 Billion during the five years through 2007
* Of the $3.1 Billion paid to the top five executives at the firms between 2003 and 2007, Goldman Sachs (GS) paid the highest total with $859 million, followed by Bear Stearns at $609 million...CEO pay at the five firms increased each year, doubling to $253 million in 2007, according to data compiled from company filings
* Merrill Lynch (MER) paid its chief executives the most, with former CEO Stanley O'Neal taking in $172 million from 2003 to 2007 and John Thain receiving $86 million, including a signing bonus, after beginning work in December 2007
* Bear Stearns CEO James Cayne made $161 million before the company collapsed in March and was sold to JPMorgan (JPM) with monetary backing provided by the U.S. Federal Reserve
* Hank Paulson, the current U.S. Treasury Secretary and former CEO of Goldman Sachs, made about $111 million from 2003-2006...current Goldman Chief Executive Officer Lloyd Blankfein received $57.6 million in 2007
* Morgan Stanley's (MS) current and former chief executives, John Mack and Philip Purcell, were paid about $194 million over the last five years.
* Lehman's Chief Executive Officer Richard Fuld made $165 million between 2003 and 2007
* Lastly, it should be noted that Excessive compensation was NOT limited to Wall Street's top executives as Wall Street firms have paid employees a greater share of revenue than any other industry, about 50%...The five Largest firms paid their 185,687 employees $66 Billion in 2007, including about $39 Billion in bonuses...That amounts to an average pay of $353,089 per employee, including an average bonus of $211,849.
Data Courtesy: Bloomberg Full Disclosure: I own shares of GS.
Jim Cramer, arguably CNBC's loudest and most famous stock market commentator, was interviewed on Thursday, March 12th by savvy late night comedy news show host Jon Stewart. In the surprisingly edgy and riveting fifteen minute Daily Show segment, Stewart takes a somewhat uncharacteristically somber approach and demands accountability from the Wall Street media and more specifically, CNBC, the #1 U.S. financial news television network. Mr. Stewart seems especially focused on discussing what he (and perhaps many others) perceived as the TV station's collective 'under-reporting' of the very serious and complex financial system issues that ultimately triggered the stock market's collapse in 2008. Stewart's anger appears genuine and PALPABLE...I repeat, this is riveting stuff : 
Posts
