Posted on 02/03/2010 5:29:43 PM PST by TigerLikesRooster
Crain's New York Business
Lazard bonuses so big, they turned 4Q into a loss
By Aaron Elstein
Published: February 3, 2010 - 3:06 pm
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 a prior year. 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.
“[Our compensation policies] 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.”
Investors weren't happy, driving Lazard's stock down by about 3% in midday trading.
(Excerpt) Read more at crainsnewyork.com ...
P!
Lazard seems to have avoided most of the bubble years skulduggery and never took any Federal bailout. They seem clean so if they are stealing from the stockholders at least they aren’t taking from the taxpayers
Well at least they aren’t screwing us the taxpayers like a lot of them. Their shareholders can move their money.
They are cutting out the middle man...government.
what a load of CRAP!. How many people could hav ebeen employed for those bonus payouts? I am all for capitalism, trust me, but dang! There is no reason, I mean no reason for this kind of BS. I am glad I have no part in that company.
Value works it way out one way or another.
The management looting of American companies continues
Most people are turning commie regarding bonuses that are paid.
I worked for a firm that had 80% of its compensation tied into bonuses.
I would like to see Katie give up some of her money tho.
Paying more bonuses in cash may avoid problems with the tax implications of stock options, particularly deferred ones. Accelerating some deferred cash awards from a prior year may have to do with expected tax increases and the expiration of the Bush tax cuts at the end of this year.
Publicity-wise, it appears to be bad, but there may be some very rational reasons for Lazard doing what they did.
At first I thought the headline read “Lizard bonuses . . . “
Did they earn their bonuses? Isn’t it possible that the board of directors is back-scratching at the expense of the shareholders?
I never give money to charities that dish out most of the money they collect to the organization rather than the folks they are supposed to be helping. I have to research for this information and keep checking it each year because it changes as managment changes.
Same with investing money with firms. It would be a cold day in you know where before I would invest in an operation like this. They work for the share holders - not the other way around.
Funds managers should be looking at this and promising investors protection from these shysters. It ranges from dishonorable to theft.
Uh, normally bonuses are an incentive to employees and management to maximize shareholder value. When you screw the shareholders to benefit the employees, the result is not exactly what is normally referred to as capitalism. I mean, did the shareholders get to vote on what fraction of corporate profits would be distributed, what would be retained as capital and what would be paid as incentive bonuses? They should. They own the company after all. Or doesn't ownership mean something on a conservative forum.
They only specialize in skimming off the cream of the merger and takeover deals that were funded by the bubble. Other than that they are decent honest hardworking citizens who earn their keep.
Sure is refreshing to see some good old fashioned shameless capitalism......makes me long for a time past. Bravo for Lazard!!!
Bruce Wasserstein was a big mergers & acquisitions guy from years back. Used to be the so called “investment banks” of Wall Street were very interested in making money in these deals. Federal Reserve low interest rates allowed them to fund a lot of mergers. This kind of activity is what Harvard and other university endowment would participate in
From what I see they had minimum involvement with securitization of mortgages and derivatives. They are fairly clean even though engaged in no productive activity that adds to the American economy
Shhh, you’ll upset the koolaid drinkers.
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