Posted tagged ‘John Mack’

Semblance of Rationality in Compensation Structure, Finally

December 9, 2008

It’s finally occurred. As I just read on Clusterstock, there is officially some sort rationality creeping into Wall St. payment structures. Claw-backs are here, as I suggested previously (I was hardly alone). Now, I wonder what the real impetus behind this sort of decision really is. Is it public officials railing against bonuses? Traders who were paid millions to put on the positions that are now sinking their (former) employers? Or, perhaps it’s the fact the C.E.O.’s and executives who are used to taking no risk whatsoever, as Felix also intuits, and are used to being compensated in the ponzi scheme that has the slogan, “in line with our peers.” This sort of groupthink, parading as transparency (that only pertains to rising compensation, obviously) has been championed by familiar names. But, other familiar names have been railing against exactly this sort of thing (yes, all of those links are to distinct posts on the Icahn Report …). I wonder if some of those executives are angry at having to give up theirs and not being able to inflict the same on their minions… Not totally unjustifiable, after all it wasn’t John Mack who persoanlly took the positions that have caused writedowns at his firm, just like it wasn’t Vikram at Citi. Still, when the kings get stung you know the subjects will feel it.

This relates to some other topics on anti-competitive behavior, but I’ll leave those for the time being.

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The Return: An Interesting Sign of Confidence

June 24, 2008

In the beginning, there was Charles Schwab returning to the epononymous firm. Then there was the return of John Mack to Morgan Stanley. Then, there was Jeff Kornthal’s return to Merrill. And now, there is Mike Gelband returning to Lehman Brothers. High level executives coming back into the fray seems to be both a huge vote of confidence and a harbinger of the worst being behind or nearly over.

This, to me, sends a huge signal. If you left, when things were good, and then an unmeasurable storm sets in, why would you return? One would need to be very confident that things were over. A returning executive would need to have a high degree of comfort that the problems internally were well understood and able to be fixed. If these sorts of tests weren’t met then why would one re-marry their fate to a firm they specifically took a financial risk divorcing? One thing never lies, I’ve noticed–the people indicators. Now, Mr. Gelband might be wrong, or things might get worse, but still…

Disclosure: I recently bought some shares of LEH … and I’m feeling pretty good about that move right about now.