Bonus payments on Wall St. have become controversial in the midst of an economic crisis with a top level executive today saying that they are reasonable but need changes to ensure the long-term interests of the business.
The comment was made by the chairman of the largest U.K. bank, HSBC Holding's Stephen Green, at the World Economic Forum meeting in Davos, Switzerland.
Bonuses are a reasonable part of compensation, Green said in a forum at the event. What we need to do is to ensure that the way bonuses are calculated align the interests of the trader or the salesperson with whoever it is with the longer-term sustainable interests of the business, Green continued.
The comment comes just days after a report from the state of New York stating that in 2008, companies gave out billions in bonuses, although the amount dropped about 40 percent from the previous year.
New York relies heavily on taxes from financial companies. Wall Street companies granted $18.4 billion in cash bonuses in 2008 to employees living in New York City, the New York State Comptroller Thomas P. DiNapoli estimated.
The payments prompted President Barack Obama yesterday to call such actions as shameful given that firms are unprofitable and are even getting financial aid from the government.
Part of what we're going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility, Obama said from the White House office, according to the Associated Press.
The current global economic crisis is the worst since the Great Depression. It has required a U.S. government bailout of $700 billion with substantial amounts of government aid around the world.
It has led several prominent global financial institutions into bankruptcy, or government takeovers.