Many of the chief executives from financial institutions, testifying before Congress, drew criticism for reported bonus grants at their companiesThe Wall Street Journal - Late last month, New York state's comptroller said Wall Street bonuses totaled $18.4 billion last year. The firestorm he provoked helped lead to legislation that may upend compensation at major banks.
So much depended upon a number so few understood. The figure, which is neither precise nor complete, is probably an underestimate.
After the figure came out, President Barack Obama called the bonuses "shameful" in the wake of the government's $700 billion plan to bail out many of these same Wall Street firms. The criticism laid the groundwork for a provision inserted into the stimulus bill signed into law this week that caps bonus payments for top earners at companies that have received taxpayer dollars.
But the $18.4 billion is merely an estimate, derived from tax-withholding data, labor statistics and bank balance sheets. Bonuses aren't always specified as such on tax returns, so they are estimated by New York state officials from bumps in pay during bonus season.
The comptroller's office releases the estimate annually, usually before some bonuses have even been paid. Later estimates, based on more-complete data, sometimes revise the initial ones by more than 40%. And even these are just estimates. Banks don't supply hard numbers, and important components, such as stock options that haven't been exercised, are excluded.
The figures also cover only employees who work in the securities industry in New York City. How many bonuses are excluded as a result is impossible to say: The industry's highest earners work in New York, but most of its employees work elsewhere.
"People have a tendency to jump to the number and not fully understand it," says Ken Bleiwas, state deputy comptroller for New York City, who oversees the number-crunching. "It's not an easy analysis."http://online.wsj.com/article/SB123509366925028921.html
No comments:
Post a Comment