By Mike Myatt, Chief Strategy Officer, N2growth

It’s bonus time again baby…Let the games begin. Some things never change, but just once it would be nice to see fiscal responsibility take precedence over the blatant greed and disregard displayed by the likes of Goldman Sachs, and Morgan Stanley. Some of the recent bonuses doled out by these financial institutions who were recent recipients of billions of dollars via the bailout are nothing short of ridiculous. Given the current state of the economy, massive layoffs, and the overall financial uncertainty in the lives of many Americans, do these types of actions do anything to restore trust in corporate America? The answer is no…In today’s post I’ll share my thoughts on the bonuses which are being paid out by these two institutions…

I understand that this is the time of year where employee expectations are high, and so is the volume of chatter around the water cooler in anticipation of that great corporate tradition…The Year-End Bonus. But more now than ever, the expectations of the citizenry of this great nation for Wall St. to do the right thing are also high. So given that our economy is in a shambles, and the fact that many Americans are financially suffering more than they have in years, are Morgan Stanley and Goldman Sachs doing the right thing? Here are the numbers, you be the judge…

• Morgan Stanley, which is receiving $10 billion from the US government, is shelling out almost $6.5 billion in bonuses (more than $138,000 per employee) even though its profits fell 41% and its shares have tumbled by 69%.
• Goldman Sachs, which is also getting $10 billion from the bailout plan, is paying out almost $6.9 billion in bonuses. That’s more than $200,000 per employee, and despite a 47% drop in its profit and 53% drop in its share price.

By any reasonable standard the numbers laid-out above reflect everything wrong with corporate America…greed, arrogance, self-indulgence, and a misplaced sense of entitlement. Those of you who have read my thoughts on compensation know that I’m a big believer in performance based pay. However my idea of a well constructed performance based compensation plan, while having tremendous upside when hurdles are eclipsed, also has a substantial downside when attainment goals are not met. Good plans both reward performance during goods times, and they penalize a lack thereof in bad times. The real problem is that these are not just bad times, they are unprecedented bad times, and times when CEOs and Boards of Directors need to depart from the ways of old, and do the right thing.

I can’t even begin to communicate the number of times I’ve heard employees complain about the size of their bonus…It was if they felt entitled to significant rewards solely based upon the fact that they happen to be employed. Is a year-end bonus a right of entitlement or a privilege to be earned? I believe that it is all to often the former and not the latter. The question is during these challenging times should Goldman Sachs and Morgan Stanley take a giant step backward and rethink things? I believe they should.

Imagine working at Goldman Sachs where bonuses in any given year are expected to range from secretaries receiving $10,000, analysts garnering close to $100,000, junior executives seeing as much as $2-4 million and top income producers receiving upwards of $40 million dollars in bonus money…To be fair, this years bonuses are down, but are they down enough? Could you in good faith accept a large bonus being paid out of the bailout and ultimately funded by tax payer dollars? I couldn’t…

At the end of the day, employers should hire well, bonus generously, and provide public thanks where merited. Employees on the other hand should be thankful for the privilege of having gainful employment and be grateful for any bonus compensation received. However this year is different…Wall St should see this and do the right thing. All I can hope for is that the employees of Morgan Stanley and Goldman Sachs will perhaps consider giving some of their bonus to those less fortunate this year…