All about BONUS!

All about BONUS!

10 years ago, I received a call from a ex-classmate who told me that he was going to backpack around the world for 6 months. The reason being he received 12 months bonus for the previous year from his company which was in the semi-con business but the cyclical business had turned down and he decided to quit before the company retrenched him. The company had record profits and everyone was rewarded with huge bonuses. He did work hard but the bonus was on top of the OT pay he received for that year. I was happy for my friend but wondered what he did right other than to join the right company at the right time - not that he had extraordinary foresight that the sector/company would have such a blockbuster year -it was all a total surprise to him.

Recently there has been a lot of talk about the bonus received by certain people. AIG which blew up and took more than US$100B of taxpayers' money to stay alive caused an outrage when it was revealed that it was paying executives including those in its derivatives dept US$100+M in bonuses. Ordinary Americans found it hard to accept. Its CEO Libby who was employed after the govt rescue to fix the company explained that the bonuses had to be given out because they were based on employment contracts signed more than a year ago before the financial mess started and these employees can sue the company for double the payment if AIG did not meet its legal obligations. That explanation wasn't enough...contract or no contract, Americans just simply couldn't accept what was seen as unfair compensation. AIG had to increase the security for its staff and advised them not to wear their employee pass in public. The outrage subsided a little when AIG executives volunteered to about half of bonus. In Britain, the home of former RBS CEO Goodwin was vandalised[Link]. Goodwin has become a hated figure seen as a symbol of greed that caused the current crisis. He refused to give up his hefty pension and that enraged many Britons.

"We are angry that rich people are paying themselves huge amounts of money while ordinary people r unemployed, destitute & homeless."
- Group calling themselves BankBossesAreCriminals (BBAC)
In Singapore we have had 2 cases that raise some eyebrows - CDC staff who were paid 8 months (anyone knows what happened to JohnLaw2012?) bonus and the CapLand CEO who received $20M in bonus. It was explained that the CDC staff performed very well at the job and CapLand CEO deserved his bonus because the company had profits of $2B in 2007.....

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