NationStates Jolt Archive

Edit - please see post 99 before responding for a scenario update.



Pretend for a moment that YOU run a bank in the US which has received TARP funds.

Your top employee brought in $20 million in high quality and highly profitable customer deposits last year - mostly from his personal relationships developed as a volunteer with many charity, community and civic organizations. He has a deep relationship with even more of your customers representing at least $150 million in deposits. His compensation is 100% commission related so he made good money. You also gave him the mostly symbolic title of vice-president. (he is one ofseveral). His clients love him and constantly sing his praises to you.

He works at least fifty hours a week plus represents you with these many organizations an average of ten hours a week. Without his help your institution may not have survived the financial crisis. (The department who exposed you to the crisis has all been sacked, their desks set ablaze and effigies burned.)

Today this top employee came to you. He says that he has been offered an up-front incentive of 1000% of his income last year (yes - ten years pay) to work for a competitor. The bonus would be on top of the regular commissions that he earns. He would have a ten-year contract.

He tells you that he is happy with his current job, but the incentive bonus works out to around $1 million dollars; There are many things he'd do for a million dollars - switching jobs is one of the easier ones. However - he says he would prefer not to - it would be an inconvenience to his customers and a considerable amount of work for him. He likes his job - but $1,000,000 is alot of money... He says that he'd stay if you offered him a counter-offer of half that amount. He is happy to sign a ten-year contract to work for you - just the same as the competitor is requiring.

You are prepared to offer him $400,000 - but before you can make that offer you see the recent negative publicity which has been critical about the bonuses that banks who've received TARP money have paid to their executives.

So what do you do? Pay him a bonus and expose yourself to the negative publicity or let him go and risk losing a substantial amount of revenues - possibly jeopardizing the future of your bank and the many people you employ?

(poll coming)

(btw - this dilema is real. Journalists have failed to report these details. (Google "Merrill Lynch Retention Bonus" for example, especially http://utube.smashits.com/video/IXjz9mEeZJM/RJ-Makay-video-to-Merrill-Financial-Advisors.html ) I don't know if it is because journalists are incompetent, lazy, don't have the knowledge or they have ethical failings of their own. Maybe a combination of all three....

Also - not polled - if you were this employee - what would you do?

Please - respond to the poll and illustration your rationalization in a post. Include what you'd do as both the owner and the employee. Don't get stupid-creative; keep it real. Be kind to others and respect their ideas even when you disagree.

Today this top employee came to you. He says that he has been offered an up-front incentive of 1000% of his income last year (yes - ten years pay) to work for a competitor. The bonus would be on top of the regular commissions that he earns. He would have a ten-year contract.

Who the hell is offering incentives of 1000% his income?

I'd give him $2 million after the crisis had passed.

thats why i have to have a blanket policy saying no bonuses at all this year and the employees need to grow up and be thankful that they have a job at all.

good luck on them finding a better job in this economy.

Who the hell is offering incentives of 1000% his income?

click the link and see - it was sorta small - here it is again;

http://www.youtube.com/watch?v=IXjz9mEeZJM

thats why i have to have a blanket policy saying no bonuses at all this year and the employees need to grow up and be thankful that they have a job at all.

good luck on them finding a better job in this economy.

So you'd let him go regardless of the loss of customers and revenue which would follow?

This is real - There ARE substantial bonuses being offered to employees who have experience successfully generating cashflow. In fact - banks are desperate for them and willing to pay... ALOT. Given their circumstances you can understand why banks are desperate for this.

As the hypothetical CEO of a bank that received TARP funds your bank is one such institution. Not paying a bonus is essentially handing your best employees to your competitor. You are OK with this? Why? Please share more.

Also - what if you were the employee - what would you do?

You are prepared to offer him $400,000
No I'm not.

I'd give him $2 million after the crisis had passed.

He responds - "You know when that will be? Will you sign a contract to that extent? You know the saying - a bird in hand..."

So you'd let him go regardless of the loss of customers and revenue which would follow?

This is real - There ARE substantial bonuses being offered to employees who have experience successfully generating cashflow. In fact - banks are desperate for them and willing to pay... ALOT. Given their circumstances you can understand why banks are desperate for this.

As the hypothetical CEO of a bank that received TARP funds your bank is one such institution. Not paying a bonus is essentially handing your best employees to your competitor. You are OK with this? Why? Please share more.
yes i would. being seen as wasting the publics money might end up with me losing MY job.

if he changes jobs, he isnt going to get a $1million signing bonus. and in this economy there will be plenty of unemployed geniuses to replace him with.

No I'm not.


If you were the employee - what would you do?

He responds - "You know when that will be? Will you sign a contract to that extent? You know the saying - a bird in hand..."
Then I give a long, impassioned speech about vices such as intemperance and greed, how excesses in the banking system have led to much of the problems the worldwide capitalist system faces, and culminate in a diatribe on the immorality of the capitalist system in general.

Then I remember I'm supposed to be a banker, and the thought experiment fails.

If you were the employee - what would you do?
I don't know, you're asking me to imagine what thoughts a person with completely different motivations and beliefs from mine would have.

I can't answer that.

yes i would. being seen as wasting the publics money might end up with me losing MY job.

if he changes jobs, he isnt going to get a $1million signing bonus. and in this economy there will be plenty of unemployed geniuses to replace him with.

You are going under the incorrect presumption that your competitors are not really offering the bonus. This is real both in my example and in real life - note the link I posted. It was small in the original but a few posts ago I put it in more visibly.

Also - anyone who can provide $100 million or so in deposits is not unemployed - they have more job security than anyone else in the country at the moment.

And.. as the employee - what would you do?

He responds - "You know when that will be? Will you sign a contract to that extent? You know the saying - a bird in hand..."

He's already willing to take 400% from me as opposed to the 1000% from someone else. Hell, I'd be wondering what I was doing paying this man below minimum wage in the first place.

I don't know, you're asking me to imagine what thoughts a person with completely different motivations and beliefs from mine would have.

I can't answer that.

Then don't answer it how you think someone else would. Answer it how YOU would given these options.

click the link and see - it was sorta small - here it is again;

http://www.youtube.com/watch?v=IXjz9mEeZJM

Did this competing bank also receive TARP funds?

He's already willing to take 400% from me as opposed to the 1000% from someone else. Hell, I'd be wondering what I was doing paying this man below minimum wage in the first place.

Not sure I understand your point... Are you saying he's foolish to take less for loyalty to you and consideration for his customers? Or are you saying something else?

Also - what would YOU do were you the employee?

Then don't answer it how you think someone else would. Answer it how YOU would given these options.
I would walk out of an inherently immoral industry.

EDIT: I'm not trying to be sarky, I just think this thought experiment assumes some premises I don't.

Did this competing bank also receive TARP funds?

Great question. Yes. They did. However their recruitment bonus is not being negatively reported in the same manner as the bonuses being offered to existing employees. Not fair - I know.

Great question. Yes. They did. However their recruitment bonus is not being negatively reported in the same manner as the bonuses being offered to existing employees. Not fair - I know.

I see you understand my problems with the whole situation.

This is a very good thought experiment you have proposed. I think I might go along with something like SaintB proposed - half a million three years from now, when no one will notice, and guaranteed employment at least until that time. $500,000 might seem like a lot of money, but you have to mitigate the risk that people will pull out their deposits and take them to competitors (which I think is what the OP was getting at) because banks use that capital to loan and generate interest revenues.

At least, that's what they are supposed to do. Most banks in my area offer less than a third of a percent interest (if any) which really disincentivizes saving for local people (who in general, excluding me, are pretty well to do) and makes it that much harder for them to raise capital.

I would walk out of an inherently immoral industry.

I don't really know you - but I somehow doubt you'd walk away from $1,000,000. Nor do I believe you'd abandon your customers and friends to the whims of other people "in an inherently immoral industry".

Um...why do I have to lay off people just because I let the Greed Bastard Go?

In fact, shouldnt it be easier to keep the other workers if I dont have to pay his salary?

And if it isnt, why wouldnt I have to lay them off anyway, and therefore let him go anyway?

How does keeping him entail an ability to keep on the workforce?

three years from now, when no one will notice

We hope.

Not sure I understand your point... Are you saying he's foolish to take less for loyalty to you and consideration for his customers? Or are you saying something else?

You quoted the old saying about a bird in the hand, I understood it to mean that he already had a bird in the hand, and I was offering him two that were still in the bushes. I pointed out that his loyalty to me and his customers compels him to be willing to stay with me for 1/5 thier offer right now, if there is the promise of double the other companies offer in the future, on top of his current earnings, why would he not stay?


Also - what would YOU do were you the employee?

I'd have moved on a long time ago when I was only earning a commission of $10,000 a year :P

This is a very good thought experiment you have proposed. I think I might go along with something like SaintB proposed - half a million three years from now, when no one will notice, and guaranteed employment at least until that time. $500,000 might seem like a lot of money, but you have to mitigate the risk that people will pull out their deposits and take them to competitors (which I think is what the OP was getting at) because banks use that capital to loan and generate interest revenues.

At least, that's what they are supposed to do. Most banks in my area offer less than a third of a percent interest (if any) which really disincentivizes saving for local people (who in general, excluding me, are pretty well to do) and makes it that much harder for them to raise capital.

An thoughtful post - so how would you respond as the employee? Also - were you to offer this employee a deferred bonus it is still a bonus according to most people (read: media). As the employee would you accept that over up-front money - particularly in light of the reduced interest (and likely commissions) forecast for the near term?

Regarding interest rates - that is an interesting conversation but outside the context of this thread. I'd be happy to discuss in another thread though.

In hindsight I think I misread some things in the OP.

Um...why do I have to lay off people just because I let the Greed Bastard Go?

In fact, shouldnt it be easier to keep the other workers if I dont have to pay his salary?

And if it isnt, why wouldnt I have to lay them off anyway, and therefore let him go anyway?

How does keeping him entail an ability to keep on the workforce?

1) He does not have a salary. In post 1 I mentioned he is commissioned only.
2) He has considerable influence over $150,000,000 of deposits with you. These customers are loyal to him (again in post 1) and are highly unlikely to stay if he goes.
3) As a bank - your revenues are directly related to your deposits. Lose deposits you lose revenues. $150 million is ALOT.
4) With fewer revenues it will be more difficult to pay your employees without going back to TARP.

So what do you do? Also - what if you are the employee? You love your boss but $1mil is $1mil....

1) He does not have a salary. In post 1 I mentioned he is commissioned only.
2) He has considerable influence over $150,000,000 of deposits with you. These customers are loyal to him (again in post 1) and are highly unlikely to stay if he goes.
3) As a bank - your revenues are directly related to your deposits. Lose deposits you lose revenues. $150 million is ALOT.
4) With fewer revenues it will be more difficult to pay your employees without going back to TARP.

So what do you do? Also - what if you are the employee? You love your boss but $1mil is $1mil....
Oh, Id leave in a heartbeat, lol...If I had other offers on the table...

and, why exactly are they unlikely to stay if he goes? Just cause your favorite teller leaves, doesnt mean youre going to up and switch banks...

You quoted the old saying about a bird in the hand, I understood it to mean that he already had a bird in the hand, and I was offering him two that were still in the bushes. I pointed out that his loyalty to me and his customers compels him to be willing to stay with me for 1/5 thier offer right now, if there is the promise of double the other companies offer in the future, on top of his current earnings, why would he not stay?

I get it now. No - He meant the bird in hand as the $1mil the competitor is offering. I'm not sure what was 1/5 of their offer - I thought you were not paying him anything upfront beyond his usual commissions.


I'd have moved on a long time ago when I was only earning a commission of $10,000 a year :P
heh - you're cheap. :)
Too bad for your customers though - the person who they were stuck with after you was a real cheezeball who screwed them without remorse. They would have been much better off had you stayed...

I don't really know you - but I somehow doubt you'd walk away from $1,000,000.
Point is, I wouldn't be in a position to walk away from $1,000,000.

Thought experiments are all fine and dandy, but when you're asking folks to assume the position of a person very different from themselves, at the very least you'll have to provide motivations, beliefs, etc., of the person they're assuming.

I get it now. No - He meant the bird in hand as the $1mil the competitor is offering. I'm not sure what was 1/5 of their offer - I thought you were not paying him anything upfront beyond his usual commissions.


heh - you're cheap. :)
Too bad for your customers though - the person who they were stuck with after you was a real cheezeball who screwed them without remorse. They would have been much better off had you stayed...

I demand at least a minimum wage man :), if I am being offered 1000% of what I earned last year and its $1 million, that means I only got $10,000 from all the hard work I did raking in that 150 million last year.. meaning I'm making ~0.75% percent of what I bring in... I would consider that a bad deal and would have gone somewhere else long ago. Its an excersize in thought, and I am thinking like an accountant :D

2/5 of $1 million is $400,000.

Oh, Id leave in a heartbeat, lol...If I had other offers on the table...

and, why exactly are they unlikely to stay if he goes? Just cause your favorite teller leaves, doesnt mean youre going to up and switch banks...

heh - we're not talking about a teller - the link I provided was targeting financial advisors from Merrill Lynch (now owned by a bank). People tend to be VERY loyal to their financial advisor when they have found one they like and trust. (likely because it is so difficult to find one such as this) However financial advisors are not the only ones. Private banker also work with businesses who count on their expertise in their every day management of assets. Individuals with substantial assets also require specialized care which a teller cannot provide and which requires a high degree of trust and relationship. A good private banker certainly will command a substantial amount of loyalty from the customers he cares for - especially when you throw in "outside of business" relationships as well (remember where I said he got his customers?)

I demand at least a minimum wage man :), if I am being offered 1000% of what I earned last year and its $1 million, that means I only got $10,000 from all the hard work I did raking in that 150 million last year.. meaning I'm making ~0.75% percent of what I bring in... I would consider that a bad deal and would have gone somewhere else long ago. Its an excersize in thought, and I am thinking like an accountant :D

2/5 of $1 million is $400,000.

um... $10,000 X 1000% = $100,000

here; http://www.math.com/everyone/calculators/calc_source/percent.htm

you're thinking like a very very bad accountant... (just busting your chops - I know percentages can be tricky)

Point is, I wouldn't be in a position to walk away from $1,000,000.

Thought experiments are all fine and dandy, but when you're asking folks to assume the position of a person very different from themselves, at the very least you'll have to provide motivations, beliefs, etc., of the person they're assuming.

I was having fun with you. I understand your point. Thanks for sharing. Curious though - what convinces you that you are so different from people who work at a bank?

um... $10,000 X 1000% = $100,000

here; http://www.math.com/everyone/calculators/calc_source/percent.htm

you're thinking like a very very bad accountant... (just busting your chops - I know percentages can be tricky)

I'm at work... instead of thinking percentages I thought whole numbers <.<

So with $100,000 a year, if I was the employee and supposedly that good with money? I think I'd already be on the road to retirement. I myself can live a quite sparse lifestyle (I lived off of $6,789.67 this year) I'd probably be on my way to retirement in some place where its always nice outside :P.

I'm at work... instead of thinking percentages I thought whole numbers <.<

So with $100,000 a year, if I was the employee and supposedly that good with money? I think I'd already be on the road to retirement. I myself can live a quite sparse lifestyle (I lived off of $6,789.67 this year) I'd probably be on my way to retirement in some place where its always nice outside :P.

You can come to Florida with me and we'll open shop as CPA's. We'll only charge people a percentage of their tax refund. If you don't mind - I'll do the math... hehe


btw - it is LOVELY here today. I am going to be changing the oil on my boat motor today. It is about 60F right now - so I won't be able to wear shorts while I do it. If you happen to find yerself in FL I'll be happy to take you out fishing. Stay warm in PA today. Don't work too hard at whatever it is you are doing...

It is about 60F right now - so I won't be able to wear shorts while I do it.

Why not? You're not in much danger of frostbite until you get below 32.

You can come to Florida with me and we'll open shop as CPA's. We'll only charge people a percentage of their tax refund. If you don't mind - I'll do the math... hehe

Ordinarily I am quite good at math, but I'm not familiar with all the special little laws and things that can get people larger returns; right now I am at work, making sure that the station is on the air, answering phone calls, talking to people over the air about the super bowl, and trying to post on NS.

Ordinarily I am quite good at math, but I'm not familiar with all the special little laws and things that can get people larger returns; right now I am at work, making sure that the station is on the air, answering phone calls, talking to people over the air about the super bowl, and trying to post on NS.

Nothing you can't learn. I used to be in radio long ago. I was told I had a face for radio ;) ... What's your format?

btw - I was just thinking - you could use some parallels to your industry in this example - but instead of depositors it'd be listeners. The more talented personalities certainly will have a loyal audience which would follow them across the dial.. And bonuses for talent is certainly common enough ( even though talent may not be - lol.)

Tell everyone that your bud from FL says "Hi" and is complaining it is so cold today in FL I had to turn off my AC...

If I were the employer:

First of all, I would not have my business set up so as to be so vitally dependent on just one employee -- that's dumbass. What self-respecting capitalist would let such a condition happen? Forget economic upheavals or competitors stealing him away -- what if he got hit by a bus? My bank would be fucked. I'm sorry, but if this really is the problem in the real-life source of the hypothetical, then the real-life bank deserves to fail due to bad management.

So, since this is the First Bank of Muravyets we're talking about here, this guy might be my biggest producer, but he is not the only one, nor would he be carrying such a huge percentage of my business. It would be a heavy blow to lose him, but not a catastrophic one.

I would still prefer not to lose him and all his accounts, though, so when he came to me with the news of the competing offer and request for a counter offer, I would do the following:

> Offer him a deal whereby his commission rate will increase, and he could make even more money in future, once profits start to rise again, provided he stays and works to make that happen.

> Remind him of the non-competition agreements he most certainly signed when he started working for me.

> If he rejects the offer, start marketing to the clients that he brought in to remind them of what a whiz-bang nifty bank we are, in the hope of persuading some of them not to follow him, regardless of their personal relationship with him.

> If he rejects the offer, let him go and absorb the business hit as best we can.

Why would I do this? Two reasons:

(1) It would not be ethical to use TARP funds to pay out bonuses, so I would already have decreed no bonuses for anyone this year, and probably a salary/commission rate freeze for anyone above a certain pay level.

(2) I will not be extorted.

If I were the employee:

I would not be creating this problem in the first place.

If I were happy and making good money where I was, I would not likely want to make a change in the middle of a financial crisis. I am more of the type to dig in during hard times, and hold on to the bird in the hand, than take a gamble on something new that might not work out.

However, if the new job on offer really was so much better than the current job that I could not refuse it, I would deal fairly with the employer I was leaving and not make any effort to steal away the clients I had brought to him.

By the way, I would have made that clear to the new prospective employer, so if they were recruiting me just to get my client portfolio, they would face possible disappointment and might withdraw the offer.

and lets say there's a giant asteroid hurtling to earth. And the only person who can stop it is Superman. But Superman is tired of being a super hero. He wants to pursue his one true dream of being a banker. So he tells us, he'll only stop the asteroid if we give him a job, for a million dollars a year. What do you do?

Well, if you're Barack HUSSEIN OSama you want to place salary caps on institutions receiving public funds, under this crazy idea that when you receive public money, you should benefit the public with it, not yourself.

So yeah, because of him Superman won't stop the asteroid, and we're all going to die. Way to go OSAMA, we're all going to die now!

WHERE'S THE CHANGE?

A nice well thought out post M. Thanks for sharing.

One thing you should know though - is that there is something called a 'brokerage protocol agreement' which essentially removes client ownership from the firm. (The client ultimately, is owned by the client and can go where they please depending on whom THEY preferred - weird, eh? This was why I made a point to illustrate the strong relationship in the op) Also - non-compete clauses are pretty much a thing of the past and seldom used in the industry. (too many lawsuits resulted from them)

I still like though how well you thought out your response is. In fact - I think the idea of raising commission rates is a splendid one and have often wondered why the industry just does not do that (either permanently or temporarily in lieu of a bonus) I chose to only include what is presently being considered/offered in real life - though I do like that idea and had considered it.

I'm not so sure that using TARP to retain/grow your deposit base by retaining/attracting talent with bonuses is a bad one. So long as it is a sound investment and used in conjunction with other strategies it makes good sense. Imagine if it were a football team who's game attendance (revenue) you were trying to improve... You'd use some of the money for facilities improvement, some for marketing, and some for talent.... Without good talent who would want to come to your games who isn't already? If you allowed everything except for talent your success would be in jeopardy... Ultimately - in every business - your success is about the talent of the people you have. If your competition is more generous than you then your ability to attract and retain talent will be limited. I think that management of all companies has consistently underestimated the value of talent... (and the further down the food chain the worse it gets. And I mean the talented ones - not the average Joe. The lower you are on the rung the less you are rewarded for excellence)

WHERE'S THE CHANGE?

The five gallon jar on the shelf, help yourself.

and lets say there's a giant asteroid hurtling to earth. And the only person who can stop it is Superman. But Superman is tired of being a super hero. He wants to pursue his one true dream of being a banker. So he tells us, he'll only stop the asteroid if we give him a job, for a million dollars a year. What do you do?

Well, if you're Barack HUSSEIN OSama you want to place salary caps on institutions receiving public funds, under this crazy idea that when you receive public money, you should benefit the public with it, not yourself.

So yeah, because of him Superman won't stop the asteroid, and we're all going to die. Way to go OSAMA, we're all going to die now!

WHERE'S THE CHANGE?

Id just get This Guy...

http://www.aintitcool.com/images2006/MasterChiefHalo.jpg

Dont worry, He doesnt charge a fee, lol...

and lets say there's a giant asteroid hurtling to earth. And the only person who can stop it is Superman. But Superman is tired of being a super hero. He wants to pursue his one true dream of being a banker. So he tells us, he'll only stop the asteroid if we give him a job, for a million dollars a year. What do you do?

Well, if you're Barack HUSSEIN OSama you want to place salary caps on institutions receiving public funds, under this crazy idea that when you receive public money, you should benefit the public with it, not yourself.

So yeah, because of him Superman won't stop the asteroid, and we're all going to die. Way to go OSAMA, we're all going to die now!

WHERE'S THE CHANGE?


not sure I follow - but whatever it is - I want a sip...

A nice well thought out post M. Thanks for sharing.
You're welcome.

One thing you should know though - is that there is something called a 'brokerage protocol agreement' which essentially removes client ownership from the firm. (The client ultimately, is owned by the client and can go where they please depending on whom THEY preferred - weird, eh? This was why I made a point to illustrate the strong relationship in the op) Also - non-compete clauses are pretty much a thing of the past and seldom used in the industry. (too many lawsuits resulted from them)
Thanks for the info, but that just reinforces the part of my post that says that, as the capo de tutti capi of this bank, it is my responsibility to make sure the business is not hanging by the thread of a single employee, so that if he goes, we face potential ruin. It obviously would be better to keep him and his money-bags friends -- sorry, I mean valued clients -- but since he could just as easily die, causing us to lose his clients, as be lured away by a competitor, then we should have been running our affairs so as to be able to handle losing just one member of our team all along.

EDIT: Also if, as you say, non-compete agreements are no longer used, then that would only motivate me more to steal his clients away from him, if possible. Referring to my point about marketing to the clients, my goal would be to convince them that their real benefit lay in staying with the financial institution that their friend led them to and which has served them so well. Friendship is friendship, you know, but money ain't friendship.

I still like though how well you thought out your response is. In fact - I think the idea of raising commission rates is a splendid one and have often wondered why the industry just does not do that (either permanently or temporarily in lieu of a bonus) I chose to only include what is presently being considered/offered in real life - though I do like that ida and had considered it.

I'm not so sure that using TARP to retain/grow your deposit base by retaining/attracting talent with bonuses is a bad one. So long as it is a sound investment and used in conjunction with other strategies it makes good sense. Imagine if it were a football team who's game attendance (revenue) you were trying to improve... You'd use some of the money for facilities improvement, some for marketing, and some for talent.... Without good talent who would want to come to your games? If you allowed everything except for talent your success would be in jeopardy... Ultimately - in every business - your success is about the talent of the people you have. If your competition is more generous than you then your ability to attract and retain talent will be limited. I think that management of all companies has consistently underestimated the value of talent...
I disagree. I do not put bonuses and raises in the same bracket as meeting regular salary/commissions. Nor do I consider it appropriate to expand your business when you were begging for money just to keep it alive.

Please - respond to the poll and illustration your rationalization in a post. Include what you'd do as both the owner and the employee. Don't get stupid-creative; keep it real. Be kind to others and respect their ideas even when you disagree.

My company announced no raises and no bonuses for this year and possibly next. So why should he be different?

The finance industry has an image problem now. Especially with the 18 billion in bonuses while getting thrown money from the government.

If the general populace doesn't trust the finance industry the problems will continue if not get worst.

If he quits, so be it. Many highly talented people lost their jobs last year and many are loosing them now. He will be easy to replace.

I say fuck him. He's probably lying about how valuable he is. Actually, since they are now effectively government employees, I think people at companies which have received TARP funds should be put on the GS salary scale.

"Ah, but they are the most valuable asset the company has, Lacadaemon, they can't afford to lose them". I say bullshit. There are 50,000 unemployed bankers right now who would gladly take their place, so if they want to quit, they are more than welcome. And it's not as if bankers have any useful skills for the most part, they are just debt merchants, and they aren't even very good at that apparently. Second, 'assets' generate income, or have some value. These people are 'liabilities' so it would be good for the balance sheet to get rid of them.

The money not used to pay them can be used to pay some of the massive debt the bastards have run up for the rest of us. Fuckers.

No one thought of the dirty underhanded tactic. Obviously if the other financial institution is getting TARP funds one anonymous leak to the press might make this interesting and make him unemployable. I wouldn't do such a thing to spite the employee merely the competition.

I think it behooves the current company to keep profitable employees happy within the the bounds of fiscal responsibility. If my company is posting losses then we as a corporate family may have to tighten our belts. Sure I would love to pay this employee what I think he deserves but Wilkins in home loans made some foolish loans and now we as a company have to eat his mistake.

I say fuck him. He's probably lying about how valuable he is. Actually, since they are now effectively government employees, I think people at companies which have received TARP funds should be put on the GS salary scale.

"Ah, but they are the most valuable asset the company has, Lacadaemon, they can't afford to lose them". I say bullshit. There are 50,000 unemployed bankers right now who would gladly take their place, so if they want to quit, they are more than welcome. And it's not as if bankers have any useful skills for the most part, they are just debt merchants, and they aren't even very good at that apparently.
This is a good point. I boggles my mind every time some failing bank or corporation points to the executives who are running it into the ground and say, "But we'll lose such good talent!" THIS is the GOOD talent? I'd hate to see what the bad talent is like.

Second, 'assets' generate income, or have some value. These people are 'liabilities' so it would be good for the balance sheet to get rid of them.

The money not used to pay them can be used to pay some of the massive debt the bastards have run up for the rest of us. Fuckers.
This is also a good point.

No one thought of the dirty underhanded tactic. Obviously if the other financial institution is getting TARP funds one anonymous leak to the press might make this interesting and make him unemployable. I wouldn't do such a thing to spite the employee merely the competition.

I think it behooves the current company to keep profitable employees happy within the the bounds of fiscal responsibility. If my company is posting losses then we as a corporate family may have to tighten our belts. Sure I would love to pay this employee what I think he deserves but Wilkins in home loans made some foolish loans and now we as a company have to eat his mistake.
I thought of the underhanded tactic. I just didn't want to say it.

In writing. ;)

This is a good point. I boggles my mind every time some failing bank or corporation points to the executives who are running it into the ground and say, "But we'll lose such good talent!" THIS is the GOOD talent? I'd hate to see what the bad talent is like.


This is also a good point.

One thing to consider. Twenty million sounds like a great deal of money to us. However, in banking finance; is it?

One thing to consider. Twenty million sounds like a great deal of money to us. However, in banking finance; is it?
I took all dollar amounts in this thread to be mere placeholders for the purpose of outlining the hypothetical. In all my responses I have been mentally replacing those with more realistic numbers. You know...adding zeroes at the end.

I took all dollar amounts in this thread to be mere placeholders for the purpose of outlining the hypothetical. In all my responses I have been mentally replacing those with more realistic numbers. You know...adding zeroes at the end.

Yea you are right. My thing is not valid.

I took the op as an attempt to justify the libertarian view point of working towards ones self interest.....

I say fuck him. He's probably lying about how valuable he is. Actually, since they are now effectively government employees, I think people at companies which have received TARP funds should be put on the GS salary scale.

"Ah, but they are the most valuable asset the company has, Lacadaemon, they can't afford to lose them". I say bullshit. There are 50,000 unemployed bankers right now who would gladly take their place, so if they want to quit, they are more than welcome. And it's not as if bankers have any useful skills for the most part, they are just debt merchants, and they aren't even very good at that apparently. Second, 'assets' generate income, or have some value. These people are 'liabilities' so it would be good for the balance sheet to get rid of them.

The money not used to pay them can be used to pay some of the massive debt the bastards have run up for the rest of us. Fuckers.
dont hold back, lac! what is your real opinion of these guys?



besides, if this guy is their best producer, he did it in the "old economy" that was run on the housing bubble and default swaps. they are going to need new guys who want to make money the old fashioned way--responsibly. they are far better off without him.

dont hold back, lac! what is your real opinion of these guys?



besides, if this guy is their best producer, he did it in the "old economy" that was run on the housing bubble and default swaps. they are going to need new guys who want to make money the old fashioned way--responsibly. they are far better off without him.

Indeed. It's interesting who they tend to gloss over the environment at the time. Take the exxon ceo who "retired" with 400 million. My 7 year old daughter could have been the ceo and exxon would have seen the same kind of profits.

Indeed. It's interesting who they tend to gloss over the environment at the time. Take the exxon ceo who "retired" with 400 million. My 7 year old daughter could have been the ceo and exxon would have seen the same kind of profits.
yeah. 2009 should make quite a difference in the profits of exxonmobile now that the price of oil has tanked.

yeah. 2009 should make quite a difference in the profits of exxonmobile now that the price of oil has tanked.

Hmm? Should we start a bet on when they start screaming for bail out money?

This is a good point. I boggles my mind every time some failing bank or corporation points to the executives who are running it into the ground and say, "But we'll lose such good talent!" THIS is the GOOD talent? I'd hate to see what the bad talent is like.

Bad talent goes to jail.

Hmm? Should we start a bet on when they start screaming for bail out money?
I'll take the side bet on how soon after that some disgruntled laid-off employee shoots the CEO. Did you see Exxon's latest profit statement? $45 BILLION dollars. That's guillotine money under some circumstances. Yeah, they better not ask for a bail out.

Bad talent goes to jail.
In other words, the bad talent gets caught? ;)

Haha, I'm in a really bad mood this morning.

Still say they are fuckers tho'.

Bad talent goes to jail.


Only if they get caught. Most of the time they "retire" with a reward.

In other words, the bad talent gets caught? ;)

In other words, if you get caught, you're bad. If you don't get caught, you're good.

I'll take the side bet on how soon after that some disgruntled laid-off employee shoots the CEO. Did you see Exxon's latest profit statement? $45 BILLION dollars. That's guillotine money under some circumstances. Yeah, they better not ask for a bail out.

Indeed!

http://i452.photobucket.com/albums/qq246/markcamp1/smileys/giljotiini.gif

Indeed!

http://i452.photobucket.com/albums/qq246/markcamp1/smileys/giljotiini.gif

lmao, thats a great smiley.....

But, I cant help but ask...Do smiley's really have a neck to chop off?

lmao, thats a great smiley.....

But, I cant help but ask...Do smiley's really have a neck to chop off?
Maybe the little ball-head got chopped in half.

Oh, and I'm so totally stealing that smilie. :D

No one thought of the dirty underhanded tactic. Obviously if the other financial institution is getting TARP funds one anonymous leak to the press might make this interesting and make him unemployable. I wouldn't do such a thing to spite the employee merely the competition.This, though I'd do it to spite both.

No one thought of the dirty underhanded tactic. Obviously if the other financial institution is getting TARP funds one anonymous leak to the press might make this interesting and make him unemployable. I wouldn't do such a thing to spite the employee merely the competition.

I think it behooves the current company to keep profitable employees happy within the the bounds of fiscal responsibility. If my company is posting losses then we as a corporate family may have to tighten our belts. Sure I would love to pay this employee what I think he deserves but Wilkins in home loans made some foolish loans and now we as a company have to eat his mistake.

Ahhhh, you make the typical manager blunder: You overestimate how much your employee cares about your 'corporate family'. He has already stated he is willing to give up half a million dollars to support you and your "corporate family" - aren't you willing to give up the same for him?

Wilkins made the shit loan - not this key employee - who in fact makes no loans whatsoever. (working in a completely different dept. of the bank - DEPOSITS) You and Wilkins have to deal with the shit loans - but your key banker does not. (and in the OP Wilkins has been fired) Your key employee performed his job exceptionally well and responsibly. He can quit if he chooses and has been offered a VERY attractive incentive to do just that. There is nothing you can do to stop him from leaving and there is nothing you can do to stop his clients from choosing to join him. And in this environment you can't afford to lose anything...

If he and his customers leave it is likely you will need EVEN MORE money from TARP. If you pay him the comparably modest amount he's asked for he will likely stay and continue being productive - which your balance sheet desperately needs.

Meanwhile - your competitor has a key employee also. If you can get him to come over to your bank then you might actually get to operate in the black this year and payoff TARP early... The point of TARP is to shore up your balance sheet - isn't it? What's better - $1mil of TARP money or $150mil of new deposits?


I was non-specific about the size of the bank in the OP. Twenty million is a good amount for any key employee in any market. It is not impossible nor is it remotely easy. A $150 mil total deposit relationship is above average also - but not rare.

A small bank could easily find itself reliant on a key employee of this size. A larger one not so much - but it is very likely that they have multiple employees of this nature all of whom are being aggressively recruited by the competition. Should they fail to retain the majority of them then the bank could be in as much trouble as a smaller could with only the one...

Also - were you the employee how would you react? You've run a clean business and you've contributed substantially to the bottom line. You feel loyal enough to give your employer the chance to retain you for much less than you've been offered. (or you could decide you want the same amount - your choice) Are you loyal enough to your employer to walk away from $400 to $1mil just to help your employer recover from a critical mistake he made which had nothing to do with you? Yes or no? Either way, please explain why.

Haha, I'm in a really bad mood this morning.

Still say they are fuckers tho'.
it goes well with your avatar.

So what do you do? Pay him a bonus and expose yourself to the negative publicity or let him go and risk losing a substantial amount of revenues - possibly jeopardizing the future of your bank and the many people you employ?As long as the guy doesn't insist on the bonus up front, then a yearly bonus that doesn't exceed his yearly income doesn't seem too excessive. (So 10 years time 100%, and we can match it.) If businesses in general would limit their bonus system in that way, many fewer people would complain.

Also - not polled - if you were this employee - what would you do?I'd be quite happy with lifetime employment at a good salary, with a good pension plan. I'm not out to live like a millionaire.
But who can really tell without being in the situation.

Ahhhh, you make the typical manager blunder: You overestimate how much your employee cares about your 'corporate family'. He has already stated he is willing to give up half a million dollars to support you and your "corporate family" - aren't you willing to give up the same for him?

I used "corporate family" mostly as a grouping tool. Look if he wants the money from a profitable institution that is fine. But I would refuse on principle to be essentially held over the coals by an employee. Once you give in you may find yourself sliding down a slippery black ice slope.

Wilkins made the shit loan - not this key employee - who in fact makes no loans whatsoever. (working in a completely different dept. of the bank - DEPOSITS) You and Wilkins have to deal with the shit loans - but your key banker does not. (and in the OP Wilkins has been fired) Your key employee performed his job exceptionally well and responsibly. He can quit if he chooses and has been offered a VERY attractive incentive to do just that. There is nothing you can do to stop him from leaving and there is nothing you can do to stop his clients from choosing to join him. And in this environment you can't afford to lose anything...


It is a team effort. You can have the best receivers on a football team but if your linemen can't stop the other team the receivers are worthless. Same here. He may be bringing in the money but without someone who can turn the cash into profits it doesn't matter.


If he and his customers leave it is likely you will need EVEN MORE money from TARP. If you pay him the comparably modest amount he's asked for he will likely stay and continue being productive - which your balance sheet desperately needs.

Meanwhile - your competitor has a key employee also. If you can get him to come over to your bank then you might actually get to operate in the black this year and payoff TARP early... The point of TARP is to shore up your balance sheet - isn't it? What's better - $1mil of TARP money or $150mil of new deposits?
<snip>

Also - were you the employee how would you react? You've run a clean business and you've contributed substantially to the bottom line. You feel loyal enough to give your employer the chance to retain you for much less than you've been offered. (or you could decide you want the same amount - your choice) Are you loyal enough to your employer to walk away from $400 to $1mil just to help your employer recover from a critical mistake he made which had nothing to do with you? Yes or no? Either way, please explain why.

If I was the employee I wouldn't be leaving because of the money I was getting bonused. I would be leaving because those bankers higher up are idiots, and I would prefer not to be responsible for getting others to invest in losers, literally. I would not take another job with another firm that took government funds because the same problems would creep up. My good name isn't worth such a paltry price

First of all I'd review the employees history to see if he is actually as orgasmically wonderful as everyone thinks he is. I'd get my corporate intelligence group to find out if the offer from the other bank is genuine. How do I know this employee isn't flying a kite?

I'd also check out potential replacements and see if he is easily replaceable. If he is, I'd tell him that I can replace him, but don't want to, and explain the new rules concerning bonuses. I would offer him the chance to stay with my institution and if his work continues to be good, after the crisis has passed I will reward his loyalty well (and do so). If he walks, I would replace him, and make loudly and publicly release the information my institution had gathered on his deal with the other bank.

If he is not replaceable, and he is as orgasmically wonderful as claimed, and the other banks offer is legit, then since I a would have to violate government policy I'd put the situation before the government and explain that this employee is useful to the institution, and that it is in the governments interest to find a way to keep him at this institution, since it is their money at stake.

Want a job at my bank. It only has $10 in assets.

As long as the guy doesn't insist on the bonus up front, then a yearly bonus that doesn't exceed his yearly income doesn't seem too excessive. (So 10 years time 100%, and we can match it.) If businesses in general would limit their bonus system in that way, many fewer people would complain.

I'd be quite happy with lifetime employment at a good salary, with a good pension plan. I'm not out to live like a millionaire.
But who can really tell without being in the situation.

The same situation? That is the point of the thread - what if you were? Pretend - stretch your imagination - don't worry - nobody will hold you to it. But do try to honestly extrapolate what you might do if offered $1mil simply to change jobs.

I do find it curious that most people have had no trouble relating to the bank chief executive's position yet many have also said they could not imaging being in the circumstances of the employee... I somewhat regret that I didn't tell the situation from the perspective of the employee rather than the chief executive in the OP. Are we more sympathetic to executives than employees? We're not talking about extraordinarily highly compensated employees at that - $100,000 is alot - but buy no means does it make someone 'rich'. I can't help but wonder if the results would be the same had the OP been from the perspective of the employee.

BTW - who said anything abut a salary or pension plan? I said in the OP that this person was commissioned only. In a slow economy they stand to see a notable reduction in income. Pensions are so uncommon it doesn't even bear mention.

You may not be out to live like a millionaire - but if someone were to offer you a million dollars just to switch jobs... why would you not? You could give it to charity if it were too much for you to handle... How many people would even give their current employer the opportunity to retain them for half that amount?

I used "corporate family" mostly as a grouping tool. Look if he wants the money from a profitable institution that is fine. But I would refuse on principle to be essentially held over the coals by an employee. Once you give in you may find yourself sliding down a slippery black ice slope.
So once an institution is not profitable they lose their primary tool to attract/retain people who can fix their problem? This employee is offering to pass on half-a million dollars worth of bonus for you and you are going to tell them they are holding YOU over the coals?

[QUOTE=Verdigroth;14465318]
It is a team effort. You can have the best receivers on a football team but if your linemen can't stop the other team the receivers are worthless. Same here. He may be bringing in the money but without someone who can turn the cash into profits it doesn't matter.
I don't disagree. You do acknowledge, however, that coaches, quarterbacks, kickers and receivers earn considerably more than linemen. The more successful they are the more they are paid. You also understand that it is not uncommon for a team to hire a key player from another team by offering them more money... right?


If I was the employee I wouldn't be leaving because of the money I was getting bonused. I would be leaving because those bankers higher up are idiots, and I would prefer not to be responsible for getting others to invest in losers, literally. I would not take another job with another firm that took government funds because the same problems would creep up. My good name isn't worth such a paltry price

You understand that in the US bank deposits are backed and insured by the federal govt up to $250,000 per individual - and more under certain circumstances. You also realize (I hope) that much of the credit problems are the result of a cascade effect which grew far beyond the banks originally responsible. I do agree that many bank executives are short-sighted nimrods who's depth perception does not extent much further than their nose - but many are not. If you are going to refuse to work for "idiot higher ups" then you had better plan for self employment no matter what your industry... (which for some could result in a self-perpetuating quandary)

I do find it curious that most people have had no trouble relating to the bank chief executive's position yet many have also said they could not imaging being in the circumstances of the employee... I somewhat regret that I didn't tell the situation from the perspective of the employee rather than the chief executive in the OP. Are we more sympathetic to executives than employees? We're not talking about extraordinarily highly compensated employees at that - $100,000 is alot - but buy no means does it make someone 'rich'. I can't help but wonder if the results would be the same had the OP been from the perspective of the employee.I have little sympathy for people who attempt shakedowns in most cases. In general I would be more sympathetic to the employee but in this case the employee is trying to shakedown the employer, and with money that taxpayers provided the employer on top of it.

First of all I'd review the employees history to see if he is actually as orgasmically wonderful as everyone thinks he is. I'd get my corporate intelligence group to find out if the offer from the other bank is genuine. How do I know this employee isn't flying a kite?

I'd also check out potential replacements and see if he is easily replaceable. If he is, I'd tell him that I can replace him, but don't want to, and explain the new rules concerning bonuses. I would offer him the chance to stay with my institution and if his work continues to be good, after the crisis has passed I will reward his loyalty well (and do so). If he walks, I would replace him, and make loudly and publicly release the information my institution had gathered on his deal with the other bank.

If he is not replaceable, and he is as orgasmically wonderful as claimed, and the other banks offer is legit, then since I a would have to violate government policy I'd put the situation before the government and explain that this employee is useful to the institution, and that it is in the governments interest to find a way to keep him at this institution, since it is their money at stake.

Thanks for posting. I encourage you to watch the video linked in the first page. Not only are there a substantial number of people this "orgasmically good", but there is also a substantial effort underway to recruit them - not only from Merrill but all banks and brokerages.

AFIK there are few restrictions on TARP - so you would not have to receive special permission from the government to spend it as you see fit. If you were able to spend $10 mil to receive $1.5 bil in new assets I don't think anyone would fault you - except the media - who would ROAST you in public for paying a bonus when you received TARP assistance. It is possible that the board of directors would cave to public opinion and fire you even though you leveraged the TARP money to considerable effect. (and no - redecorating your office is not part of the deal :) ....)

I have little sympathy for people who attempt shakedowns in most cases. In general I would be more sympathetic to the employee but in this case the employee is trying to shakedown the employer, and with money that taxpayers provided the employer on top of it.

Hmmm. Is it a shakedown if the other offer is legit and/or the employee is willing to accept half the amount to stay? What if it were only salary at stake with the new bank offering to triple the salary and the employee saying he would stay for an increase of half that amount? Is that also a shakedown? Doesn't the ten-year contract count for anything? What would you say is the difference between negotiations and a shakedown? Would you say it would be more fair for the employee to accept the offer from the competitor without giving his present employer any chance at all to retain him? What about if the present employer were to use the 'taxpayer money' to try to attract a similar employee form the competition? It could make a big difference in the banks ability to recover quickly... If no taxpayer money were allowed to be used this way then wouldn't it give a considerably unfair advantage to the firms who least need any help?

The level of 'entitlement' that so-called free market people are showing is ridiculous. As bad as old people and those on welfare in my opinion.

I am convinced that 99% of the world is now socialist. They just differ in what my money should be spent on.

The level of 'entitlement' that so-called free market people are showing is ridiculous. As bad as old people and those on welfare in my opinion.

I am convinced that 99% of the world is now socialist. They just differ in what my money should be spent on.
Hehe, and I'll bet you wish they'd get the hell off your lawn, too. :p

Hmmm. Is it a shakedown if the other offer is legit and/or the employee is willing to accept half the amount to stay? What if it were only salary at stake with the new bank offering to triple the salary and the employee saying he would stay for an increase of half that amount? Is that also a shakedown?Yes.

Doesn't the ten-year contract count for anything?Perhaps. I don't really know why someone would want one, so I can't say for sure.

What would you say is the difference between negotiations and a shakedown?Negotiations occur when both sides are on relatively equal footing. A company that is on the verge of going out of business is hardly in the position to negotiate.

Would you say it would be more fair for the employee to accept the offer from the competitor without giving his present employer any chance at all to retain him?Yes, though the competitor shouldn't be making such an offer under the circumstances either.

What about if the present employer were to use the 'taxpayer money' to try to attract a similar employee form the competition? It could make a big difference in the banks ability to recover quickly... If no taxpayer money were allowed to be used this way then wouldn't it give a considerably unfair advantage to the firms who least need any help?It would depend on how lucrative the deal is that the bank is offering the similar employee.

Hehe, and I'll bet you wish they'd get the hell off your lawn, too. :p

Damn, kids!!!

Yes, though the competitor shouldn't be making such an offer under the circumstances either.
Why not? They are not in the business of protecting their competitor.. If they can get ahead using legal, moral and ethical means they should regardless of how it affects their competitor. Recruiting is certainly fair game.


It would depend on how lucrative the deal is that the bank is offering the similar employee.
Hmm, offering about 1% for 150X the assets seems lucrative, coupled with a 10 year contract for that successful person to work for you for the next 10 years or forfeit the bonus... Seems lucrative for both parties.

Also, I forget - did you say that you'd accept the offer from the competition and not give your employer the chance to retain you were you the employee in question?

"He tells you that he is happy with his current job, but the incentive bonus works out to around $1 million dollars; There are many things he'd do for a million dollars - switching jobs is one of the easier ones. However - he says he would prefer not to - it would be an inconvenience to his customers and a considerable amount of work for him. He likes his job - but $1,000,000 is alot of money... He says that he'd stay if you offered him a counter-offer of half that amount. He is happy to sign a ten-year contract to work for you - just the same as the competitor is requiring.

You are prepared to offer him $400,000 - but before you can make that offer you see the recent negative publicity which has been critical about the bonuses that banks who've received TARP money have paid to their executives.

So what do you do? Pay him a bonus and expose yourself to the negative publicity or let him go and risk losing a substantial amount of revenues - possibly jeopardizing the future of your bank and the many people you employ?

(poll coming)

(btw - this dilema is real. Journalists have failed to report these details. (Google "Merrill Lynch Retention Bonus" for example, especially http://utube.smashits.com/video/IXjz...-Advisors.html ) I don't know if it is because journalists are incompetent, lazy, don't have the knowledge or they have ethical failings of their own. Maybe a combination of all three....

Also - not polled - if you were this employee - what would you do?"



I would tell this employee that because this bank and virtually every other bank is now subsidized by the public taxpayers, there are no more "bonuses" and the salary is no longer on "commission"--that will not be occurring in any bank that takes public funds because, essentially, they are now all federal workers. As a result, only the CEOs make UP TO $400,000, but everyone starts at $55,000 like other state, federal and city workers. Their salary can increase in good years by a percentage, say a 4-year contract of 0, 2, 3 and 31/2 percent, but the longer one stays and produces, the salary can reach up to $400,000, but the starting salary is $55,000.

Explain that this is how city, state and federal employees are treated, they are paid with public funds too, and sometimes even in "good" economic times, they don't get raises.

I would tell this employee that because this bank and virtually every other bank is now subsidized by the public taxpayers, there are no more "bonuses" and the salary is no longer on "commission"--that will not be occurring in any bank that takes public funds because, essentially, they are now all federal workers. As a result, only the CEOs make UP TO $400,000, but everyone starts at $55,000 like other state, federal and city workers. Their salary can increase in good years by a percentage, say a 4-year contract of 0, 2, 3 and 31/2 percent, but the longer one stays and produces, the salary can reach up to $400,000, but the starting salary is $55,000.

Explain that this is how city, state and federal employees are treated, they are paid with public funds too, and sometimes even in "good" economic times, they don't get raises.

You could say that - but you'd be lieing. The bonuses ARE out there. They are real and the competition is using them aggressively to recruit the best talent. (see the links from page 1 - and the ones who have not taken TARP funds are especially doing well - to the detriment of those who have) You are not likely to retain the loyalty of your employee if you lie to him. Also - there is no limit on pay for any finance workers - especially not on those who are paid solely by commission. You have lied twice to your loyal employee who came to you with an offer rather than a resignation. You are absolutely management material! OF course - your employee was disgusted by your dishonesty and has left your company and $150,000,000 in assets left with him - so your management job may not last very long. Maybe you could work for the government? There are plenty of opportunities for liars there... OR even better - the media!

You could say that - but you'd be lieing. The bonuses ARE out there. They are real and the competition is using them aggressively to recruit the best talent. (see the links from page 1 - and the ones who have not taken TARP funds are especially doing well - to the detriment of those who have) You are not likely to retain the loyalty of your employee if you lie to him. Also - there is no limit on pay for any finance workers - especially not on those who are paid solely by commission. You have lied twice to your loyal employee who came to you with an offer rather than a resignation. You are absolutely management material! OF course - your employee was disgusted by your dishonesty and has left your company and $150,000,000 in assets left with him - so your management job may not last very long. Maybe you could work for the government? There are plenty of opportunities for liars there... OR even better - the media!
You, like everyone on Walll Street, in finance and in the banking industry want to continue a system while pulling in billions of taxpayer money and "offloading" your bad debts and loans into a "toxic asset" bank run by the federal government.

When you do all of that, you become public employees because the system is now nationalized. You cannot privatize the assets and nationalize the debt. The whole thing becomes nationalized. As such, you are no longer entitled to "commissions" and must work on public taxpayer dollars for "salaries" like every other public employee does. Once you pay back the public taxpayers and absorb your own toxic debts, you can return to whatever system you want, but I assume that the government will never again allow you to work in the unregulated fashion to which you have become accustomed.

You are continuing, like a heroin junkie, to rely on a system that no longer works and I am not lying to you when I say that the public has had enough and will not fund your crazy banking, financial and banking systems any longer and simultaneously pay you "commissions" and bonuses. You have now become middle and lower class taxpayers, like the rest of us, and are no longer entitled to live in your unregulated top 1-3% bubble.

Oh, and if you and the others don't like your public salary of $55,000 to start, you are now all eligible as federal workers to join a union. The union will collectively bargain for you for your increases. Now that you will be union members too, lobbying for what amount to only cost-of-living increases, I suspect there will be a lot less union bashing going on.

You, like everyone on Walll Street, in finance and in the banking industry want to continue a system while pulling in billions of taxpayer money and "offloading" your bad debts and loans into a "toxic asset" bank frun by the federal government.

When you do all of that, you become public employees because the system is now nationalized. As such, you are no longer entitled to "commissions" and must work on public taxpayer dollars for "salaries" like every other public employee does. Once you pay back the public taxpayers and absorb your own toxic debts, you can return to whatever system you want, but I assume that the government will never again allow you to work in the unregulated fashion to which you have become accustomed.

You are continuing, like a heroin junkie, to rely on a system that no longer works and I am not lying to you when I say that the public has had enough and will not fund your crazy banking, financial and banking systems any longer and simultaneously pay you "commissions" and bonuses. You have now become middle and lower class taxpayers, like the rest of us, and are no longer in your top 1-3% bubble.

I regret to inform you that in this threads hypothetical scenario you do not get to invent government policy - only the policy of your bank. In real life you also do not get to invent government policy. You are welcome to wish and pretend all you like - but it does not change the reality that you are wrong - about bonuses, compensation to financial services employees, their role in private industry, and pretty much everything else. I've included links earlier you can verify this with. It is not hard to google either. You may wish to change the current financial system (which I won't discourage) - but for now it is what it is and your ruminations won't change that. I would encourage you - that if you wish to change the current system - you should begin with a substantially more complete understanding of how it works. You can't fix something that you don't understand.. (I have a lawnmower engine in my garage as evidence)

You have not done a very good job of staying within the bounds of this threads topic - adding your own fiction rather than staying within the defined bounds of the dilemma - which I was careful to make consistent with reality should there be any confusion about the circumstances. I don't mind if someone wants to add dimensions to the situation - so long as they are grounded in reality as it presently stands - your inventions do not. Not even close.

Your toxic attitude is also a concern. You need to lighten up. However old you are you are too young for a heart condition just yet. I'm not sure why you are targeting me (I presume it is me when you say "you") but I can assure you that your ire is misplaced. You also would find it misplaced to blame every financial services industry worker for the woes of this nation. That is a very simplistic and uninspired conclusion. Really, you need to go outside for some fresh air for a while.

I regret to inform you that in this threads hypothetical scenario you do not get to invent government policy - only the policy of your bank. In real life you also do not get to invent government policy. You are welcome to wish and pretend all you like - but it does not change the reality that you are wrong - about bonuses, compensation to financial services employees, their role in private industry, and pretty much everything else. I've included links earlier you can verify this with. It is not hard to google either. You may wish to change the current financial system (which I won't discourage) - but for now it is what it is and your ruminations won't change that. I would encourage you - that if you wish to change the current system - you should begin with a substantially more complete understanding of how it works. You can't fix something that you don't understand.. (I have a lawnmower engine in my garage as evidence)

You have not done a very good job of staying within the bounds of this threads topic - adding your own fiction rather than staying within the defined bounds of the dilemma - which I was careful to make consistent with reality should there be any confusion about the circumstances. I don't mind if someone wants to add dimensions to the situation - so long as they are grounded in reality as it presently stands - your inventions do not. Not even close.

Your toxic attitude is also a concern. You need to lighten up. However old you are you are too young for a heart condition just yet. I'm not sure why you are targeting me (I presume it is me when you say "you") but I can assure you that your ire is misplaced. You also would find it misplaced to blame every financial services industry worker for the woes of this nation. That is a very simplistic and uninspired conclusion. Really, you need to go outside for some fresh air for a while.
Thanks for the advice--annexed is an article from today's Wall Street Journal. The condition that the wall, financial, banking and real estate companies have left this country in has upset me and the other 97%. The "toxic attitude" is a result of the "toxic unregulated financial system." A walk in the park will not fix that mess or our attitude. I suggest you reconsider yours!

"WASHINGTON -- The Obama administration, seeking to improve public perception of the $700 billion financial rescue, is expected to announce this week tougher executive-compensation restrictions for some firms that get government aid.

Officials also are considering splitting off the Troubled Asset Relief Program from the Treasury and creating an independent entity, according to government officials. Some within the department think such a move could help improve the perception of the bailout, which has come under heavy criticism for being too secretive and not imposing enough rules and conditions on banks that get government aid.

The administration is working on a broad plan to bolster the financial sector and is expected to soon detail its efforts to help weakened financial firms. Treasury Secretary Timothy Geithner, possibly later this week, is expected to give specifics of the administration's plan, including an effort to help homeowners in danger of foreclosure.

Wall Street has been anticipating the new administration's plans, including expecting President Barack Obama to ask Congress for more money. Many economists no longer expect the second half of the $700 billion, which Congress recently approved, to be enough to fix the ailing financial sector.

Before it announces those plans, the administration is trying to lay the groundwork with politicians and the public, who have grown weary of bailing out banks. The administration, realizing the public is expecting quick action, seems poised to announce some of its efforts in stages.

Its first move appears aimed at bolstering public support for the financial bailout by applying tougher rules to banks that get a substantial amount of money. Chief executives of firms that receive "exceptional" aid will be banned from receiving any severance payments and they, along with the top 50 executives, will see their bonus pools shrink by about 40% from 2007 levels.

It won't be easy to upend a compensation system that is woven into the fabric of the U.S. financial system. Many Wall Street employees work under employment contracts that can't be unwound.

Defenders of the old system said it still is useful despite blowups that have made Wall Street look disconnected from political and financial reality. If the government imposes caps or other limits on compensation, some bankers worry that the most talented people will flee to firms that are less regulated.

The Obama administration hasn't detailed what qualifies as "exceptional" aid, but government officials say the rules will apply in cases in which the U.S. provides significant dollars, along the lines of what has been given to American International Group Inc., Citigroup Inc. and the Detroit auto makers.

Last week, Mr. Obama called it "shameful" that Wall Street firms awarded $20 billion of bonuses even as Washington was spending taxpayer dollars to help bail them out of trouble.

Still, the administration isn't expected to attach any new pay curbs to healthy banks that get money through the $250 billion Capital Purchase Program. That program, which has invested nearly $200 billion in more than 300 financial institutions, imposes some modest pay restrictions, including a ban on so-called golden-parachute severance payments for top executives.

The administration hasn't finalized its plans for the heart of the bank rescue. It is considering a series of steps that would inject money into financial firms while relieving them of their toxic assets. The administration is considering a two-pronged approach that would further help banks by having the government buy a portion of their bad assets while offering guarantees against future losses on some of the remainder.

The administration continues to wrestle with the details, including what the government should pay for the troubled assets that are hampering the balance sheets of financial institutions. Mr. Geithner has assigned teams of staff to explore alternatives and is expected to present a plan to Mr. Obama shortly.

—Aaron Lucchetti and Matthew Karnitschnig contributed to this article.
Write to Deborah Solomon at deborah.solomon@wsj.com"

Oh, and if you and the others don't like your public salary of $55,000 to start, you are now all eligible as federal workers to join a union. The union will collectively bargain for you for your increases. Now that you will be union members too, lobbying for what amount to only cost-of-living increases, I suspect there will be a lot less union bashing going on.
*imagines a bankers' union, and a bankers' union strike* Hm....

*imagines a bankers' union, and a bankers' union strike* Hm....
Yes, and I imagine that the rest of us who are paying the salaries and assuming the bad debts of the wall street, financial, banking and real estate industries will have as much sympathy and respect for the bankers' union demand for a pay increase, as you have had for us. Particularly after these employees and CEOs have shown their "qualifications" for their jobs and how well the system is working under their management. Perhaps we should have them tested annually like teachers too!

Thanks for the advice--annexed is an article from today's Wall Street Journal. The condition that the wall, financial, banking and real estate companies have left this country in has upset me and the other 97%. The "toxic attitude" is a result of the "toxic unregulated financial system." A walk in the park will not fix that mess or our attitude. I suggest you reconsider yours!


Nice article. It mentioned Citi, AIG and auto co's (GM and Chrysler to be specific, so far Ford is abstaining) will be subject to more scrutiny, most particular at the CEO level. It says nothing about the rank and file, low level executives, and specialists - which was the point of this thread.

Something which you may not know is that it is not very difficult at all for a financial services employee to go to work at his own business. Limiting pay for a few troubled companies would do nothing except push their best employees to the competition or to become self-employed . (there could be some potential advantages to this but the scope of that conversation is far too broad for this thread) It certainly would not result in the nationalization of the entire financial services industry - nor the unionizing of every employee in that industry. (though I would happily support unionized tellers and other areas)

The 'toxic' unregulated financial system you speak of is something I will again suggest you investigate more thoroughly. So far you've demonstrated little more than your grasp of bumper-sticker slogans popularized by the media.

Nobody can be expected to know everything and it's OK not to. But if you are going to be critical and/or suggest specific changes for something then you had better have at least a cursory understanding of what you are being critical of or suggesting changed. Your propensity to blame everyone in the financial services industry leaves me doubting you posses this.

Most of all I would remind you one last time to please try to stay within the topic of this thread. It is not about you desire to nationalize the banking system - it is about the semi-hypothetical situation in post 1. If you choose to respond to it I would ask that you please try to stay within the bounds of current and present business reality.

Regarding attitude - I don't grasp your point. So far as I know I have been friendly and conversational. If you've taken offense to anything then I am sorry. I can assure you that none was intended. Maybe some of my irony and jest was misplaced?

Pretend for a moment that YOU run a bank in the US which has received TARP funds.

Your top employee brought in $20 million in high quality and highly profitable customer deposits last year - mostly from his personal relationships developed as a volunteer with many charity, community and civic organizations. He has a deep relationship with even more of your customers representing at least $150 million in deposits. His compensation is 100% commission related so he made good money. You also gave him the mostly symbolic title of vice-president. (he is one ofseveral). His clients love him and constantly sing his praises to you.

He works at least fifty hours a week plus represents you with these many organizations an average of ten hours a week. Without his help your institution may not have survived the financial crisis. (The department who exposed you to the crisis has all been sacked, their desks set ablaze and effigies burned.)

Today this top employee came to you. He says that he has been offered an up-front incentive of 1000% of his income last year (yes - ten years pay) to work for a competitor. The bonus would be on top of the regular commissions that he earns. He would have a ten-year contract.

He tells you that he is happy with his current job, but the incentive bonus works out to around $1 million dollars; There are many things he'd do for a million dollars - switching jobs is one of the easier ones. However - he says he would prefer not to - it would be an inconvenience to his customers and a considerable amount of work for him. He likes his job - but $1,000,000 is alot of money... He says that he'd stay if you offered him a counter-offer of half that amount. He is happy to sign a ten-year contract to work for you - just the same as the competitor is requiring.

You are prepared to offer him $400,000 - but before you can make that offer you see the recent negative publicity which has been critical about the bonuses that banks who've received TARP money have paid to their executives.

So what do you do? Pay him a bonus and expose yourself to the negative publicity or let him go and risk losing a substantial amount of revenues - possibly jeopardizing the future of your bank and the many people you employ?

(poll coming)

(btw - this dilema is real. Journalists have failed to report these details. (Google "Merrill Lynch Retention Bonus" for example, especially http://utube.smashits.com/video/IXjz9mEeZJM/RJ-Makay-video-to-Merrill-Financial-Advisors.html ) I don't know if it is because journalists are incompetent, lazy, don't have the knowledge or they have ethical failings of their own. Maybe a combination of all three....

Also - not polled - if you were this employee - what would you do?

Please - respond to the poll and illustration your rationalization in a post. Include what you'd do as both the owner and the employee. Don't get stupid-creative; keep it real. Be kind to others and respect their ideas even when you disagree.

What would I do? I'd give the money to the model employee's favorite charities. That would increase both the company's and employee's reputations and ultimately bring in even more business.

What would I do? I'd give the money to the model employee's favorite charities. That would increase both the company's and employee's reputations and ultimately bring in even more business.

I like the way you think...


edit - ahh, but I just realized there's a flaw. Since you never paid the employee the money then you can't use it to enforce the ten year contract with him... (in the real world if the employee quits in the ten year period they must return a pro-rated amount of the bonus) He could still leave you and then take the bonus from the competition! -- You would still have some good graces with the charity but he would still be perceived as having helped attain the generous donation...

bummer.

I think you better look at the new treasury regulations on TARP II money, which remain in flux while Barney Frank and Obama impose even more stricter standards. Your hypothetical appears to be based on TARP I assumptions:

hp-1364: Treasury Issues Additional Executive Compensation Rules ...Jan 16, 2009 ... Treasury Issues Additional Executive Compensation Rules Under TARP. The U.S. Department of the Treasury today issued interim final rules for ...
www.ustreas.gov/press/releases/hp1364.htm - 7k - Cached - Similar pages -

In other words, the bad talent gets caught? ;)

To paraphrase a certain someone.

Statement: Bad talent seems to be a relevant term only when one is caught in the act. Otherwise it is viewed as good talent, no?

*imagines a bankers' union, and a bankers' union strike* Hm....

but...but...it worked in the writings of eminent russian-american philosopher Ayn Rand!

I think you better look at the new treasury regulations on TARP II money, which remain in flux while Barney Frank and Obama impose even more stricter standards. Your hypothetical appears to be based on TARP I assumptions:

hp-1364: Treasury Issues Additional Executive Compensation Rules ...Jan 16, 2009 ... Treasury Issues Additional Executive Compensation Rules Under TARP. The U.S. Department of the Treasury today issued interim final rules for ...
www.ustreas.gov/press/releases/hp1364.htm - 7k - Cached - Similar pages -

My friend there is nothing in there relevant to this discussion. Until you are able to perceive that I'm going to have to heed the advice of Mark Twain regarding debates with people like you.

SCENARIO UPDATE. - additional fact previously unknown -

Thanks everyone who has participated so far. I've enjoyed got thoughtful posts. I thought I might add some extra dimensions to the dillema to see how it may effect the outcome. Though it I'd hypothetical it is based on real world rules and circumstances. It likely is being played out in real life as we chat.

Here is the new info:

As bank president you made the decision to hit your competitors best local man last month. You paid him a $1,000,000 bonus and he has brought over $1,000,000 in new accounts so far. The existing employee has never received any bonus whatsoever from you. You also know that though he is good with his customers you can expect at least 25% will remain with your bank even if he leaves - reducing his income by about that amount. All people in his job are experiencing about a 10% reduction in comp this year due to the economy.
What do you do as the banker. What d you do as the employee?

I'd say as the manager, I'd pay him the bonus, because based on details in the OP I'm such a hopelessly bad manager that I would probably continue to make bad decisions.

As the employee, I'd take the new job pretty much no what my current manager offered because he's obviously a twit. (Of course, if my new manager would be a similar level of twit, I'd probably stay put and look for a third option.)

This is based on my limited (5+ years) experience working at various white-shoe brokerages.

EDIT: sorry, didn't see the update. As the manager, I'd be less likely to stop the employee from leaving, though as I'm still such a twit I'd probably pay him in the end. As the employee my decision is unchanged.

Why not? They are not in the business of protecting their competitor.. If they can get ahead using legal, moral and ethical means they should regardless of how it affects their competitor. Recruiting is certainly fair game.Recruiting by giving an employee ten times what they currently make with TARP money is not moral.

Hmm, offering about 1% for 150X the assets seems lucrative, coupled with a 10 year contract for that successful person to work for you for the next 10 years or forfeit the bonus... Seems lucrative for both parties.That's too much of a bonus. The bank I'd work for should not be giving out that kind of money.

Also, I forget - did you say that you'd accept the offer from the competition and not give your employer the chance to retain you were you the employee in question?I didn't say either way. I suppose if I was in the position I'd take the offer, but I can't imagine myself being the type of person who would work for the financial industry.

The same situation? That is the point of the thread - what if you were? Pretend - stretch your imagination - don't worry - nobody will hold you to it. But do try to honestly extrapolate what you might do if offered $1mil simply to change jobs.Changing jobs isn't that simple a matter, though. Will I like the other job as much as the current one, will I like my new colleagues as much, will the other CEO's secretary let me snog her in the broom closet as much? They're all relevant questions, certainly.
And honestly, no matter how great one's imagination, there is no telling what one's attitude toward money is in a situation entirely unlike the one you're in. Presumably to get into that position in the first place, I'd have to care a lot more about money then I do. And if that were so, any decision would naturally go differently.

I do find it curious that most people have had no trouble relating to the bank chief executive's position yet many have also said they could not imaging being in the circumstances of the employee... In the first case it's a business decision, in the second case a life decision. It's not the same thing. Unless you live life like a business, which would be very, very sad.

We're not talking about extraordinarily highly compensated employees at that - $100,000 is alot - but buy no means does it make someone 'rich'. Compared to what I live off it does. It's enough to support 2.4 kids and 1.3 ex-wives, I'm sure. Why would you need more?

BTW - who said anything abut a salary or pension plan?Ooh, me, me, I did. I'd rather have a 50 thousand a year salary + compensation for inflation + the same commission as usual + a decent pension plan + medical plan + dental plan + staying at the job I like till retirement.

I said in the OP that this person was commissioned only. In a slow economy they stand to see a notable reduction in income. Pensions are so uncommon it doesn't even bear mention.Well, one has to think ahead. You can't work forever, and it'd be very annoying to have to reduce your standard of living after you retire.

You may not be out to live like a millionaire - but if someone were to offer you a million dollars just to switch jobs... why would you not?Because the OP says I like my job. So if money isn't my main motivator, why would I? It makes more sense not to do something if there isn't a reason to, than do it because there isn't a reason not to. Well, if you're in any degree risk-averse, anyway.

You could give it to charity if it were too much for you to handle... How many people would even give their current employer the opportunity to retain them for half that amount?How many would jump off a bridge if everyone else did? They can lead their life their way, and I'll lead mine my way. Maybe I'd rather work one day less per week, and spend some more quality time with the computer, err, family.

That's too much of a bonus. The bank I'd work for should not be giving out that kind of money.
I'm curious - as a banker how much would you pay a person who could deliver your bank that level of assets? (Bonus only. Since they are commissioned their income is beyond your control - but you should know the industry average annual income from commissions (net) is about 1/3% of assets)

Bearing in mind - you want to retain and attract the best talent - not just a bunch of schmoes (at least - I would presume you want the best talent). Gathering large assets requires a skill set, intuition, knowledge, licenses, experience, etc. that not everyone possesses. Hire a schmoe and it could be a disaster... (on average less than 1/3 of people who enter the job are still in the industry 24 months later - and rookies are considered VERY successful if they accumulate $6million in deposits/accounts in their first year. Keep in mind - your bank received bailout money to shore up it's balance sheet - which is precariously low on assets and high on loans...

Also keep in mind that it is not impossible for this person to decide to become a sole proprietor and their income rate would double to about 2/3% of assets... (along with the headaches of business operations)

I'm curious - as a banker how much would you pay a person who could deliver your bank that level of assets? (Bonus only. Since they are commissioned their income is beyond your control - but you should know the industry average annual income from commissions (net) is about 1/3% of assets)

Bearing in mind - you want to retain and attract the best talent - not just a bunch of schmoes (at least - I would presume you want the best talent). Gathering large assets requires a skill set, intuition, knowledge, licenses, experience, etc. that not everyone possesses. Hire a schmoe and it could be a disaster... (on average less than 1/3 of people who enter the job are still in the industry 24 months later - and rookies are considered VERY successful if they accumulate $6million in deposits/accounts in their first year. Keep in mind - your bank received bailout money to shore up it's balance sheet - which is precariously low on assets and high on loans...

Also keep in mind that it is not impossible for this person to decide to become a sole proprietor and their income rate would double to about 2/3% of assets... (along with the headaches of business operations)I wouldn't have them on commission at all.

I wouldn't have them on commission at all.

So how would you compensate them bearing in mind they could work for any competitor or operate as a sole proprietor...

It is possible that the board of directors would cave to public opinion and fire you even though you leveraged the TARP money to considerable effect. (and no - redecorating your office is not part of the deal :) ....)

That, and in light of the new concerns over bonuses exceeding $400k would be why I'd go to the gov't first, but not talk to the media... unless my guy walked, in which case I'd wind up the media to give the other bank (and ex employee) both barrels.

The reason for this crisis is greed, and it has to stop somewhere, so I would let that employee go. If the other company can afford to pay them, fine. But if my bank is in financial trouble, I'm going to still show that my customers needs come first, and in doing that I feel I could offset some of the loss to the customer base. I would just convince clients the former employee's service and style is a permenant template of the entire company's staff quality, if that's what impressed them to begin with.

That, and in light of the new concerns over bonuses exceeding $400k would be why I'd go to the gov't first, but not talk to the media... unless my guy walked, in which case I'd wind up the media to give the other bank (and ex employee) both barrels.

Read up a bit - the limit you reference is in regards to senior executives only - this guy is rank and file. Last I checked Merrill Lynch employed about $15,000 guys just like him. If the media cared they would already be all over it. In the real world these bonuses are happening ( I've shared an example in post 1 and referenced it several times. It is also not hard to Google it. It is quite common practice. I am weary of repeating these facts. )

Since the real world media is not negatively reporting these well known details about the bonuses (instead just broadly brushing the fact bonuses are paid) it is safe to assume that they don't consider these facts newsworthy or interesting... or the media is completely incompetent. (or they worry that if the details were known the public would realize that the media is back in hte business of muckraking) Either way your plan will produce noting but a $150mil reduction in your banks assets and not much else - except maybe a call from your BOD to discuss why you let a top producer go to the competition without a fight.

(BTW - considering the update included in post 99 you may want to avoid being publicly hypocritical to a transaction which you yourself just completed with an employee from another institution - I'll presume you overlooked that post.)

The reason for this crisis is greed, and it has to stop somewhere, so I would let that employee go. If the other company can afford to pay them, fine. But if my bank is in financial trouble, I'm going to still show that my customers needs come first, and in doing that I feel I could offset some of the loss to the customer base. I would just convince clients the former employee's service and style is a permenant template of the entire company's staff quality, if that's what impressed them to begin with.

Isn't the point of every union negotiation to get a fair share of the revenues the employee generates? Do you consider that greedy? We have established in prior posts that this employee is running a profitable 'business' within your bank. We have establishes that most of his customers are more loyal to him than your bank. We have established that he could make double the income were he to open his own business with his loyal clients. ( you can extrapolate from that the profit your bank makes on his work ). We have established that hiring a rookie at lower pay is both risky and takes over a decade to build to the same level..

Why should he accept below market income from your bank? He has already offered a discount to you compared to what you gave the new hire and what the competitor offered him. Calling him greedy is not likely to benefit you nor retain his loyal customers. He is as much your customer as he is your employee - if not more so. Like any good shopper he can compare and negotiate. Just because he has been more successful than most you feel he should consider the needs of your bank ahead of his own - the same bank that allowed another department to nearly run it into the ground?

You say you will take care of your customers - but what about your employees - are your profits more important than they are? Doesn't 'taking care of your employees' include having the best, most experienced and capable staff you can afford? Wouldn't that include retaining an employee the customers are loyal to?

So how would you compensate them bearing in mind they could work for any competitor or operate as a sole proprietor...There would be rewards for reaching certain targets, such as increased vacation time or stock options. Furthermore, most of these rewards would be for sustained performance. It's one thing to get money to the bank, it's another thing to get people to keep it there.

(BTW - considering the update included in post 99 you may want to avoid being publicly hypocritical to a transaction which you yourself just completed with an employee from another institution - I'll presume you overlooked that post.)

I didn't say I would be paying the same bonus to hire someone new, otherwise they'd be no point in replacing him (other than personal reasons). Secondly, my main target would be my ex-employee not the other bank per se. The main aim is to drag him through the mud, if it hurts the other bank, that's a not un-desirable side effect.

Well - his holiness the Obama has taken this hypothetical situation, and has declared a code of conduct for people to follow IRL.
"If your company requires tax payer support, the top salary is $ 500.000 including bonuses"

I think it is doubtful that you would be able to match the offer. Half the offer is even tough on short notice. This amounts to extortion ,legal of course. It possible some of his clients won't go with him. It is possible that some actually joined your company because of your bank's performance. Get a list of all his clients and personally contact each one of them begging on hand and knees if required to stay.

There would be rewards for reaching certain targets, such as increased vacation time or stock options. Furthermore, most of these rewards would be for sustained performance. It's one thing to get money to the bank, it's another thing to get people to keep it there.

Mr Employee is interested in your offer - except for the stock option part (sorry, but your bank stock sucks and he wants no part of it) He has offered you a 10 year contract - but if you have other designs he's open to hearing them. He also wants to know what goals and what additional compensation for hitting them you are offering which would be comparable to the offer from your competition.
(and - if you are playing with post 99 he also wants to know if you are making this offer just to him, or to the new guys also)

I didn't say I would be paying the same bonus to hire someone new, otherwise they'd be no point in replacing him (other than personal reasons). Secondly, my main target would be my ex-employee not the other bank per se. The main aim is to drag him through the mud, if it hurts the other bank, that's a not un-desirable side effect.
I think you missed the point - you hired someone new because they brought over new account (which is a big help to your bottom line) and because they will continue to bring in new business also. If you can keep both employees the gains are all good. If you lose your older employee then you have gained nothing - in fact netting a loss of about $50mil in deposits. Also - according to post 99 you DID pay the new employee the bonus... If you want to we could say it was your predecessor who did - but either way your employe is looking at the new guy - who is a lower producer with less tenure, and wondering why he isn't getting the same amount of love...
And - you really have nothing to drag him through the mud about since this practice (sign-on, transition or incentive bonus - whatever you want to call it) is - in reality - quite common. You may as well call the news and report him for driving a low mileage car for all the good it'll do you.

Well - his holiness the Obama has taken this hypothetical situation, and has declared a code of conduct for people to follow IRL.
"If your company requires tax payer support, the top salary is $ 500.000 including bonuses"

Your valued employee says "No problem - first of all - I'm sure you are aware that the limit applies to senior executives - not salespeople. (You are aware his VP title is ceremonial only) He also shares with you that the competition's offer is actually a ten year interest-free loan with $100,000 forgiven every year. that way his annual taxable income is only going to be about $200,000 - well below the compensation limit anyway. Of course - if he were to quit or be fired he would have to pay back any non-forgiven part of the loan ; and he will essentially have more than double his annual tax bill for that period - but that is what assures the employer he will be working hard for 10 years. He also plans to put the cash into tax-free bonds yielding him about $60,000 per year tax-free - which should help with that tax bite (not to mention the reduction in taxes by spreading it out over time through the forgiveness period)

He is - at the end of the day - a salesmen. He sells deposits for your bank. If you cap his compensation he will either stop producing when he hits the max, work for a competitor who won't cap him or go to work at his own business - also with no cap. You aren't the only act in town - if you can't pay him comparable to what the competition does he may join the competition - or BECOME your competitor... He is giving you the opportunity to prevent this for half the cost your competitor is willing to pay him - and he's willing to sigh on for ten years working for you at the agreed rate..