Lazard bonuses so big, they turned 4Q into a loss

[brooklynite]

Source: Crain's New York Business

What should have been a profitable quarter a Lazard Ltd. turned into a surprising loss due to the investment bank paying its people big bonuses.

The firm doled out $616 million in compensation and benefits to about 2,300 employees last quarter, or more than triple the amount handed out in the same period in 2008. It was a consequence, Lazard said, of a decision to pay more bonuses in cash and accelerate some deferred cash awards from prior years. But so great was the firm's generosity that compensation costs overwhelmed quarterly revenues and resulted in a net loss of about $55 million for the fourth quarter. The charges also almost wiped out full-year profits.

Lazard Chief Executive Kenneth Jacobs, who took over from the late Bruce Wasserstein last fall, argued that he had no choice but to pay his people to protect and build the franchise. Lazard was one of the few major Wall Street firms to avoid government bailout assistance.

“ should enhance our competitiveness and drive shareholder value,” Mr. Jacobs said, in a prepared statement. “Our goal is to grow annual compensation expense at a slower rate than revenues.”

Read more: http://www.crainsnewyork.com/article/20100203/FREE/100209948

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Another bank losing money? Quick, arrange a Government bail-out!

[ellenfl]

1. is that after dividends are paid? i would think shareholders

would rebel . . . solid gold cadillac style.

ellen fl

[tbyg52]

10. You think they listen to *shareholders*....?

It's just a bunch of interlocking boards scratching each others' backs.

[Zenlitened]

13. Ding.

Sad, but true.

[ellenfl]

20. go watch 'solid gold cadillac'. i realize it's only a movie but

it CAN be done. all ya need are proxies. however, since shareholders are often other institutions or corporations, it is probably more difficult to get a shareholder's proxy.

ellen fl

[yava]

15. Wait, is that 300,000 US$ per employee of bonuses?

I should try to get a job there.

[Hannah Bell]

2. sure, just a miscalculation. bank on it, the high "bonuses" provide some kind of benefit

both to the players & the firm.

[Nihil]

17. Hmmm ...

I'm not familiar with these things but just *when* is the company
evaluated for tax on profits?

Is it before or after employee compensation is taken out?
(i.e., gross or net)

If the latter then there is a clear benefit in not only paying
their people huge bonuses (from the loyalty side) but in turning
a taxable profit into a tax-offsetable loss ...

:shrug:

[The Magistrate]

3. This, Sir, Is A Capital Crime, In Every Sense Of The Word....

"When a robber demands a banker turn over his wallet, the banker will turn over his trousers too, since it does not occur to him a man might have a limit...."

[Warpy]

5. It used to be called embezzlement

and is certainly theft from the stockholders. I would hope those stockholders don't throw away those proxies this year but use them to vote against and oust the current board of directors. Clearly, they're incompetent at best and thieves at worst.

Welcome back. You were missed.

[alcibiades_mystery]

7. So good to see you

Love the quotation!

[dixiegrrrrl]

14. You are back on DU!!!!

Speedy recovery indeed, Sir.

[lonestarnot]

21. Nice to see you!

I always love reading your posts, this one is no exception. :hug: Hope you're feeling better. :hi:

[LibertyLover]

23. Good to have your "voice" back on DU

welcome back!

[daleo]

29. Great quote.

Nice to see you back.

[WriteDown]

4. Lazard was one of the few major Wall Street firms to avoid government bailout assistance.

Then I say go for it, but don't ask for any funds later.

[Mz Pip]

6. I just love their excuse

that they have to pay these huge bonuses to protect the people and build the franchise.

So they pay these people huge bonuses because they're afraid if they don't their people will go somewhere else. Where would they go? Into teaching? The Peace Corps?

Is there really that much of a turn around in these high end jobs?

[Lucky Luciano]

11. "Is there really that much of a turn around in these high end jobs?"

Oh indeed there is!! My friend is a quant at a well known European investment bank. He got worried because the boss was hinting at paying him $100k as a bonus for his first full year of work. So, knowing how critical he was to the trading desk and taking some of my advice, I told him to solicit other bids. This week he dropped the bomb that he got a better deal elsewhere, but he has not resigned, so he can give his current bank a chance to outbid the other bank. Of course, if the other bank comes over the top again...

In other words, yes - competition for talent is high - and the new bank in question, BTW offered to pay twice the bonus that the current bank was about to pay!

[Mz Pip]

16. 100K is one thing

Millions and millions is another.

How much talent does it take to drive a bank into the ground? I could do it for half the price these guys charge.

[Vinnie From Indy]

19. One of the biggest lies told by Wall Street

The fact is that the excuse that gargantuan bonuses MUST be paid to retain talent is a lie on the scale of the media is liberal. In this economy, it is absurd to offer that banks MUST pay these huge bonuses.

[boppers]

8. There's a novel way to piss off shareholders...

72% of their revenue went into employee pockets, $565,000 per employee.

[yurbud]

26. when is there going to be a shareholders revolt over the bachanal at the top?

[liberal N proud]

9. Twisted logic

“ should enhance our competitiveness and drive shareholder value,” :rofl:

[Name removed]

12. Deleted message

Message removed by moderator. Click here to review the message board rules.

[SpiralHawk]

18. Republiconomics at work

Ptoooey

[Dappleganger]

22. Assholes.

[progressoid]

24. Whew. I sure am glad we stop that meltdown.

Looks like everything is back to normal again.

[yurbud]

25. this sounds like an Onion article

[femrap]

27. Great....now they

don't have to pay taxes.

WASF.

[no limit]

28. If they didnt take government funds who cares what they pay them

Just make clear they will never get government funds either.

[daleo]

30. If they didn't get those bonuses

Who would figure out hare-brained schemes to wreck the economy?