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Why Wall Street execs help themselves first

Written by Rosa Colucci on .

Count me among the people shocked by the post-bailout AIG bonuses. Having practiced in corporate bankruptcy for the past several years, it never fails to surprise me that so many failing companies make large "bonus" payments to their executives, usually during a time in which the company is losing money and cannot afford to overpay its employees.

When a company begins to suffer financial losses, those in charge of the company have two options: They can forgo bonuses and reduce their salaries in an attempt to keep the company solvent, or they can get as much as they can before the company tanks. Usually in small businesses, as a company begins to struggle, the owners do whatever they can to keep the company afloat because it is their lifeblood. That often means lower salaries.

However, in a large, publicly owned company, the opposite seems to be true. The underlying problem in large companies such as AIG is that executives have no real ownership stake in their company (those "stock options" are not worth much if the company fails). Greed is a strong motivator and executives often focus less on helping the company remain solvent and more on helping themselves.

Until something is done to force corporate executives to put the companies' interests before their own, undeserved bonuses will continue to plague Wall Street.

 

SCOTT SCHUSTER
North Side

 

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