It's bonus season on Wall Street and the heads of major banks are dreaming their dreams of 7- and 8-figure bonuses. Now I was able to count on my fingers and an 8-figure bonus comes to between 10 and 99 million dollars. I suppose that seems like chump change for banks which so recently were bailed out to the tune of 11-figures (tens of billions) by taxpayers.
The constant refrain from the banks is that they need to reward their valuable employees, many of whom were on the job as their employers teetered on the edge, and in some cases over the edge, of bankruptcy. You'd think they would look for better people to run their business. Not CIT. Fresh out of bankruptcy, CIT announced this morning that they have hired John Thain as CEO. Maybe you remember Mr. Thain. He's the fired head of Merrill Lynch who famously redecorated his office for $1.2 million while his firm was collapsing under the weight of bad loans and was sold to Bank of America which then required a second bailout. Perhaps CIT felt that a new CEO with experience in mismanagement and bailouts would be just the ticket. Their last CEO, Jeffrey Peek, was also a Merrill alum, and he led the company into bankruptcy despite a federal bailout.
The shareholders and bondholders lost plenty at Merrill Lynch, Bank of America, and CIT. But the boards of directors at those companies wield their rubber stamps and continue to hire the likes of Peek and Thain. I will vote no on every proxy I get this year. No to mismanagement. No to the reelection of directors who keep hiring clowns.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).