EDITOR'S TAKE: A bonus takes years of hard work

12 February 2009

2 minute read

EDITOR'S TAKE: A bonus takes years of hard work

It's all too easy to deprecate bonuses and all who receive them.

At their outer reaches, bonuses are difficult to justify. One individual in receipt of tens of millions (or even hundreds of millions in the case of hedge fund traders), is excessive. But most bonuses are not nearly so large: five figures frequently; six figures maybe; seven figures rarely.

While any bonus beyond the 1k received by cashiers at Lloyds is likely to evoke ire in the current environment, it should also be remembered that the receipt of an apoplexy-inducing six figure sum is often the culmination of a decade of dedication and sacrifice at the altar of 12 hour days.

Investment banking careers aren't open to everyone. In the past decade banks have adopted rigid and rigourous recruitment procedues. Positions paying big bonuses are now usually accessible only to people who have worked hard consistently throughout school and university.

And when they attain a position in an investment bank, these people will typically be expected to work harder still.

Not everyone is keen on this, and not everyone, therefore, is in a position to receive a bonus.

There are anomalies: in 2006 some first year analysts straight out of university earned in excess of 100k; successful traders can (could) make big money relatively quickly. Many bonuses, however, take years of careful cultivation. And there's always the risk of a major downturn and sudden redundancy before they bear fruit.

AUTHORSarah Butcher

Global Editor

Th
The Canadian
17 February 2009
You brit lame-asses are going down
What else have you left to sell ? no more energy left in the north sea and no more financial services for a few years
To the laid off investment bankers et al. :
please don't come to Canada to pan-handle !
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Fr
Freda
17 February 2009
Everyone's missing the forest for the trees. The ability to create money out of nothing through various instruments caused a widespread cycle of bubbles that led to unsustainable asset prices which in turn fed into profits at banks that paid out ridiculous bonuses. Without these bubbles, no one in equities, real estate, mortgages, etc would have been able to get these payouts. Neither would the regular stock investor or home owner experienced such gains. FACE IT! All of us got huge BONUSES in the last few years,whether it be paid by the bank or the economy. No one was an investing genius. So now that the bubbles have popped, I hope you had been wise with your opportunities. Now can we please have some sanity back in terms of risk/rewards???
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alan
17 February 2009
no bonus for banks got who a bailout. Employees who can't take it, -please just do us a favour and quit.
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Co
Coco Heart
14 February 2009
Giles, if you went to a restaurant and paid them lot of money to cook you a special extra hot curry. Who is at blame if you fall ill? A quant's job is to create models for whatever product the market demands. We're just doing our job of creating a 'synthetic' price for these products. Everyone knows that these prices are synthetic. Its not really a quants fault if a trader does not know how to interpret these models - they shouldnt be using the model if they understand it.
The models for structured and corrleation products are quite complex as you say but the models only exist because there is/was a demand for these products.
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beentheredonethat
13 February 2009
A bone...
Agreed, surely some of the 'mutts' deserve something for their efforts and yeah again some of them may have worked extremely hard and expect a bonus which is fair enough! A lot of good dogs have been canned, and on the other hand dead weight has been dropped, however - WHO GETS what? is the question.
Undoubtedly there are still useless dogs lying around claiming they deserve big FAT bonuses... when they should consider themselves lucky to still be there... naturally they expect bonuses and then... here we go AGAIN, everybody claims to have worked hard and deserve a reward, BUT if a percentage of people worked hard and a % of people didn't and everyone is claiming they did... who decides??
What some people view as hard work and A LOT of effort others may find irrelevant thus leaving a gap between people who claim to have done this & that and others who actually put the elbow grease in and did it!
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