Bonuses and numbers in context

Wow. Bonuses are big news at the moment. The most recent example is AIG’s proposed bonus payments in the US. I understand the backlash: the government is bailing out a mis-managed business to the tune of $30bn, and the tax-payer doesn’t want to see the money squandered.

In a similar vein, Citibank is planning to spend $10m on a suite for its CEO, Vikram Pandit, having been bailed out to the tune of $45bn. On this latter example, WXYZ says the following:

Plans and instructions call for the installation of at least one Sub-Zero refrigerator and icemaker in the renovated space, along with "premium grade" millwork and Madico Inc. "Safety Shield 800" blast-proof window film. The project includes 17 private offices, each with space for administrative assistants, as well as two conference rooms and open areas with "soft seating," according to the plans.

Pandit told Congress that he "get[s] the new reality and [will] make sure Citi gets it as well."

I’m not sure he does.

While I understand the need in AIG to continue to provide HR policies that keep attrition at an acceptable level, the Citibank example spanks of greed and a lack of remorse. As well as doing the right thing, more so now than ever before, these companies need to be seen to be doing the right thing. Which means Zanussi instead of Sub-Zero, Formica instead of millwork, and maybe a limit on administrative assistants to one per executive or, call me radical, shared resources for multiple executives.

That said, working in the government sector I am more aware than many of the press’s ability and tendency to use huge numbers to make a point. $165m in bonuses is a huge number. But if you compare this to the $30bn bailout, it’s 0.55%. Or the equivalent of $550 on a $100,000 bailout. The company should certainly think about whether the bonuses are warranted and necessary, but at the same time the press does not help by bandying about such large numbers without context.

I’ve thought about the issue of context for many years, but this cartoon from xkcd prompted me to start typing. That, along with this revelation on what a trillion dollars looks like. Wow!

Comments

Leave a Reply