What will you do to Save Your Job?

Man the Lifeboats !

Executives at the helm of your financial services companies are reeling from the subprime mortgage losses and to appear empathetic, they are opting to relinquish their multimillion dollar bonuses (for this year only) to save their jobs or their public image.

I can foresee the day when CEOs will be down to 1 0r 2 cases of Dom Perignon a week. Quelle dommage! Man the reflective glass barricades on the ground level, the stockholder wolves are at the door!

John Mack, the CEO of Morgan Stanley, announced during his company's fourth quarter earnings conference call on December 19 2007 that he would give up his bonus, that year. Unfortunately, even this strategy of trimming some of his own fat and lightening the executive load, as the ship sinks past the first fathom and goes deeper, doesn't always work.

Bear Stearns the investment bankers - Their CEO James Cayne, along with his CFO, Sam Molinaro, announced that the entire executive committee would not be getting their bonuses, this year. Unfortunately, this 'too little too late' gesture did not have the desired effect. It did not placate the shareholders, as they had hoped.

Bear Stearns announced on Tuesday that Cayne had resigned from his post as CEO of the investment house. To soften the blow, Cayne will remain in his humble position as chairman. In 2006, Cayne earned a cash bonus of $17 Million. Where did all this money come from? Your investments, of course. It makes you wonder why the annual bonus on your investment was restricted to a few hundred dollars. Well, an important man has overheads, he has to drink and eat, regularly! Oh no, wait, that's all on 'expenses'. I wonder what his expense account looked like that year?

Giving up their bonuses is not a job-saving strategy, it is a "face saving" strategy. An executive 'garage' sale, except what they are giving up is not theirs in the first place. It belongs to the shareholders and investors. An empty gesture when so many employees and investors are getting a raw deal; substantial financial losses, no bonuses and faced with being laid off. The executives are simply doing something politically correct by not walking off with five million to 17 million dollars, depending on who you are.

There is a big difference in the multi-million dollar bonuses that executives slice off for themselves and the few dollars being offered to placate investors, employees and shareholders. Investors and employees normally require 'bonuses' to earn a living wage. A far cry from the executive feeding trough, with its frenzy of snouts and diverse income streams. Don't be concerned. Most senior executives can live very happily on their 'expense' accounts, which can include the rent, energy bills and maintenance of a fine downtown apartment, close to the office and some petty cash to pay for the taxis, parking and maid service.

If they can struggle through to retirement, then they have a nice half million dollar pension per year to see them through and a large comfortable preferential stockholding to sit on.

The irony is, these executives may not have been elligible for bonuses this year anyway, given that their companies displayed such poor performance. That was certainly the case at Bear Stearns and many others. Like the sub-prime mortgage bonds and options themselves, its all just another illusion from the masters of hype, rhetoric and corporate magic; fireworks, smoke and mirrors to entertain the masses, and to distract them from the truth.

It would appear that we have learned nothing about leadership from the sinking of the Titanic and the lifeboats are still for executive use only.