Foot, looking from the outside in, your comments make sense.  However, if you did not pay retention bonuses, you could no longer pay recruiting bonuses (i.e. upfront money).  Why?  If you didn't like a merger you were involved in, you could just jump to the competition for an upfront bonus.  Otherwise, your firm risks losing thosuands of brokers to the competition.  Now, the argument could be made that if NOBODY paid retention bonuses as part of industry "standard practice", then it wouldn't matter.  But how do you unwind a standard practice in the industry?  It is, of course, a free-enterprise system.

Personally, I agree.  I don't understand how people could get paid hundreds of thousands of dollars (or more) to continue working in the same chair, for the same firm, with the same clients.  I could understand a small "transition package" for the advisors getting acquired (to compensate for the lost productivity to learn new systems, possibility of losing a few clients, etc.).  But if you are the acquirer, what the hell are you getting compensated for?

It doesn't.  Show a WB/AGE client that almost 400 page debate on the retention bonus and I'd bet clients would leave by the hundreds.  Just out of principle. 

[quote=footsoldier]Does anybody else think that its time that retention bonuses go away?

The AIG debacle is the latest example of ridiculous behavior of companies.They are not alone...Merrill paid god knows how much to Thain and his crew before they were acquired by Bof A.  If I read one more time that in order to keep their "good people" they have to pay them these enormous bonuses while they run their companies into the ground I may have to buy stock in American Standard from puking so much!. It just doesn't pass the smell test.

How can we ever instill confidence in our industry if we allow these firms to continously shoot themselves in the foot for one thing or another. I say its time to get rid of all this fluff, I don't care if its producers or management. If we have to pay bonuses, why not pay them for perfomance....period. Let us not forget that we are in the business of trust. It's time to bring back integrity and ethics in the financial services industry.

Employee retention is a huge issue, even outside the financial services field. Being a relatively new transplant to the industry, 'retention packages' did seem to be an awfully strange practice to me. Part of the charm of the corporate world, at least where I came from, was that nobody was irreplacable. I always believed that the most compelling thing a company could do to keep its employees was make it a great place to work, and get the hell out of the way of the producing people. That 'retention' money will only last so long, and then you are still working at the place that you think sucks. If you were thinking of leaving, it was likely because you didn't care for working there, not because of the payouts.

Obama is on TV raising hell about the AIG bonuses.  Unfortunately, it’s probably just more political rhetoric.

see my previous comments on Quaisi-Rents

[quote=MinimumVariance]see my previous comments on Quaisi-Rents

<---- me laughing at AIG paying out $165 million in bonuses (or whatever they paid) and getting major negative backlash, while ML paid retention bonuses of $4 billion and executive bonuses that were more than that!!!

be mindful that aig, holding company is separate from the individual entities. the profitable operations in p&c and brokerage will die without the bonuses. 

the profitable operations in p&c and brokerage will die without the bonuses

Our visceral reaction to AIG bonuses aside, the core issue, at least as I see it, is that these bonus agreements were in place BEFORE the waste hit the rotary air mover. As such, the employees are entitled to their bonuses. Now government should, in the interest of fairness, hold it’s collective nose and see to it that future agreements are more in line with taxpayer sentiments. (When all is said and done, that’s all government cares about.) It’s a very slippery slope we’re on when we let government decided after the fact whether or not someone should get what they negotiated for in good faith.

If we don’t learn from the transgressions of the past we are destined to repeat it.

[quote=footsoldier] If we don’t learn from the transgressions of the past we are destined to repeat it.

[quote=footsoldier]If we don’t learn from the transgressions of the past we are destined to repeat it.

B-

foot,

Retroactively taxing income is a d*** thing to do, plain and simple. If the income was gained illegally, take it back. If it was gained legally, and you don’t like it, tough. Change the law.

I agree the precedent is alarming. Most of us despise government intervention for all the reasons you and Val site. The only way for us to avoid intervention is to act responsibly and when we see abuses don't look the other way and make excuses for bad behavior. We can not reward unethical or bad business practices.