Ground Floor:It was a good result for former Davy dealer Eamon Finnegan when Mr Justice Thomas Smyth ruled that the stockbroking company must pay him his €260,000 bonus.
The company had claimed that the payment of bonuses was entirely discretionary and that it was entitled to alter the terms and conditions relating to the payment of them.
Most people will agree that a bonus scheme will be discretionary. Generally, you are paid a bonus when your company has done exceptionally well and you have contributed to that success.
Sometimes even if it hasn't done that well you get a bonus (or, in the case of many chief executives, an increase in the compensation package).
Many people in Irish financial services would expect that their annual bonus be a significant proportion of their annual salary, which is why bonus time is so eagerly awaited by all concerned. Most bonuses are paid in their entirety in January.
The problem in Mr Finnegan's case, it seems, was that after a few years in which paying the entire bonus was the norm, Davy apparently changed the rules and, instead of handing over a lump sum in January, paid it over time, conditional on the receipient remaining with the company.
Essentially, this meant that bonuses became more of a "golden handcuff" arrangement than anything else, meaning that if someone left the company, they would forfeit a large sum of money. However, a bonus is intrinsically different to a golden handcuffs. A bonus is a reward for work done, not for simply staying with the same company.
In my experience, bonuses were usually paid in lump sums, although there were a number of times when we had to wait until February or March before the cash was handed over. It was certainly the case, however, that after the bonuses were paid, some people (clearly feeling that they were worth more) left the company. Presumably this is what Davy was hoping to avoid.
Given the amount of money sloshing around in financial services, it does seem rather mean- spirited to drip-feed the staff a bonus and withhold it if someone leaves. Seeing valuable people depart is an occupational hazard for any employer and, in a competitive jobs market, all you can do is hope that you are offering the best package possible and keeping your employee motivated.
I've attended a number of courses designed to show employers how they can retain staff even if they can't match the pay of a rival. It's all about being warm and fuzzy and caring and telling people that you value them. Which is all very well - and it is a management style to which I subscribe - but there comes a point when it all comes down to money. I have made career choices myself where financial gain wasn't the motivating factor but money always talks - particularly in the financial services sector.
This holds true in Dublin as much as London or New York, where bonuses for 2006 topped the record-breaking levels of the previous year. In London, more than 4,000 people were expected to receive an extra £1 million (€1.5 million) in the wage packet this year as a thanks for all the ball- breaking, number-crunching, high- financing deals they put together during 2005. That is worth a lot of warm and fuzzy feelings.
On Wall Street, the total bonus pot reached $24 billion (€18.6 billion), up 17 per cent on 2005. Goldman Sachs, which saw its fourth-quarter profit increase by nearly 93 per cent, paid out $16.5 billion (€12.8 billion) in bonuses to its staff, an increase of 40 per cent over last year. If the money was evenly distributed to all its employees, each would get more than $620,000 (€480,000). But it isn't. When you want to be warm and fuzzy with the cash you have to be warmer and fuzzier with the biggest players.
Lloyd Blankfein, who took over as chief executive of Goldman Sachs in June 2006, will be compensating himself to the tune of $53.4 million, an increase of 46 per cent on the package his predecessor took home.
Taking home a couple of $50 million-plus bonuses should keep you pretty happy for the rest of your life. For people like Blankfein and all those traders who take home eight-figure packages, money cannot be the only reason they go to work.
Maybe it's the lure of being the alpha male that keeps them glued to the monitors long after the less dedicated have spent their more modest windfalls on a luxury car or a nice piece of real estate.
According to a recent interview with Forbes magazine, there are nights when Blankfein can't sleep. He worries about "unforeseen events" that could "unravel years of wealth creation". Not his own, but the wealth of the company, which has been a giant performer since its flotation in 1999.
Performance has been good because Goldman Sachs takes risks and because the company gets involved in all parts of a transaction (which leads to a certain conflict of interest, though the firm calls it "leverage"). When you're highly leveraged, the rewards can be - as the firm has demonstrated - phenomenal.
Not everyone decides that being an alpha male with sleepless nights is for them. Last November, Scott Kapnick, who was global co-head of investment banking at the firm, announced his retirement.
Kapnick is 47 and has been with the company for 21 years. Perhaps he feels the time has come to smell the roses. Pundits put the value of his bonus at about $10 million and there has been no talk of Goldman withholding it because he's leaving the firm.
But presumably for Goldman and for Blankfein, $10 million isn't worth losing any sleep over.
