US
Does Wall Street Place Employees Above Shareholders?
Jul 23 2008
Wall Street gadfly James Grant, who has published Grant's Interest Rate Observer since 1983, wrote in a recent Wall Street Journal essay that:
"The big brokerage firms are not in business so much to make a product or even to earn a competitive return for their stockholders. Rather, they open their doors to pay their employees -- specifically, to maximize employee compensation in the short run."
Do you think that "to maximize employee compensation in the short run" is Wall Street's primary goal?
If so, does the situation call for any type of reform, such as altering compensation practices or restricting banks' use of leverage (the central villain in Grant's piece)?
Or, should government - instead of providing a safety net when things go wrong - punish institutions for reckless behavior (another reform Grant seems to want)?
If you are speaking of the CEO's and other high-level officers, yes compensation comes before the interest of shareholders. When was the last time you saw a failed CEO who supposedly "resigned" walk away without a "golden parachute?" However, if you are speaking of average "employees," very few firms give a damn about them, even though they are the ones who make the wheels go round day in and day out. That's why "job hopping" has become more prevalent. Employees recognize there is no such thing as employer loyalty, so more and more are looking out for their own best interest. They recognize that employers are a fickle lot, driven by a bottom line that they are not inclined to improve through their own personal sacrifice of accepting smaller paychecks. Instead they short-staff and pile on their already overstressed workers. Ask anybody who works for an investment bank how that's been working out for them.
Fr33dom7 31 Jul 2008
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