To President Barack Obama, Wall Street's $18.4 billion in bonuses is "shameful." To thousands of bank employees who don't sit in corner offices, that money helps pay the bills.
Outrage over the bonuses reached as high as the White House this week following news that financial firms were rewarding employees even as they were being bailed out with billions of taxpayer dollars. The feelings are understandable: The average Wall Street bonus of $112,000 was about twice the average American's income.
But the issue is a complicated one.
While Wall Street investment banks and other financial firms make headlines for the millions paid out to certain executives, more modest bonuses go to workers from human resources representatives to secretaries, as well as employees who actually made money for their companies last year.
Jason Weisberg, vice president of the Wall Street brokerage Seaport Securities, said bank employees count on performance bonuses like salesmen count on commissions.
"What are you supposed to pay them?" Weisberg asked. "Or are you not supposed to pay them? And if you don't pay them, how do you expect that employee to stay employed at that company?"
A product manager at one investment bank said she is cutting corners after her 2008 bonus fell by 38 percent, even though her job performance exceeded expectations and her division posted a profit. To save money, she's raising the deductible on her health insurance to lower the premium, shopping around for less expensive car insurance and cutting back on small luxuries.
"My bills haven't gone down by 40 percent," said the worker, who isn't being named because talking to the media is against her employer's rules.
Many argue that anyone who works at a bank right now should feel lucky to be employed — after all, hundreds of thousands of their colleagues have been shown the door over the past year.
Most compensation experts say bonuses will be much lower in the coming years, but that some sort of bonus system should stay in place at these institutions to separate the strong performers from the laggards.
Part of the problem with bonuses for 2008 stem from many of them being contractually guaranteed before the banks' troubles escalated.
The governments "Troubled Assets Relief Program," or TARP, required compensation for senior executives to be subject to "clawbacks" — in which the companies would recoup pay if it was based on inaccurate information, or if the employee's actions hurt the company. But it did not give the government authority to scrap bonus contracts.
Consultant Vicki Elliott said she expects the banks will make fewer guarantees going forward. Elliott leads the global financial services industry consulting group at the business consulting firm Mercer, a subsidiary of Marsh & McLennan Cos.
"The landscape is changing," she said.
If it were up to James Reda, a compensation consultant who has testified on Capitol Hill, bonuses would not be cut to zero, but instead brought down to about $8 billion or $9 billion. That would be about half of the 2008 Wall Street bonus pool and about a quarter of what it was in 2007. The base salaries of most secretaries and information technology workers on Wall Street are comparable to other industries, anyway, he said.
The $18.4 billion doled out in Wall Street bonuses last year was down 44 percent from the previous year. Per person, the average bonus dropped 36.7 percent to $112,000. (It's a smaller drop because the investment banks laid off so many workers last year.)
All the very top executives at the major banks — including Citigroup, AIG, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Merrill Lynch — gave up their bonuses.
And many major banks have been modifying their bonus policies. Both Morgan Stanley and Citigroup said late last year they plan to tie compensation for employees eligible for bonuses more closely to performance, and allow for clawbacks. Europe's UBS AG also added a clawback provision.
Managers argue that while Main Street views bonuses as extra money, the annual incentive often represents a big chunk of compensation for most Wall Street workers. That means banks would risk of losing their smartest and most productive employees if the bonuses were trimmed too dramatically.
Executive compensation consultant Steven Hall said he knows of at least one firm, which he wouldn't name, that already has drawn up a list of potential employees to poach if they are unhappy with their bonuses.
Although many people might say good riddance to any defector against this backdrop, Hall argues taxpayers should want banks to retain the cream of the crop given that the federal government has become a shareholder in so many banks.
"The reality is good people will always be able to get a job someplace else if they are unhappy," Hall said. "So do you want to own stock in a company that is filled with people who can't get a job anywhere else?"
But even to some Wall Street workers, the pay has gotten out of hand.
Gordon Charlop, managing director at the Wall Street brokerage Rosenblatt Securities, called the president's criticism "fair."
"I can't disagree with the president here," Charlop said, adding that there's a "disconnect" between pay structures on Wall Street and the companies' responsibility to the country and shareholders.
A Wall Street veteran at one financial services firm said he was notified that his bonus will be slashed by 30 percent. He would not disclose the amount, but said he isn't losing any sleep over it.
"You could absolutely make an argument that we shouldn't be getting any bonuses this year," said the worker, who also requested anonymity because of his company's restrictions on talking to the media.
"If you are going to have a pay-for-performance system, you have to take the lows with the highs," he said. "This just happened to be a really low year."
He said he feels sorry for clerks and other people making less than $60,000 per year who are also having their annual bonuses lowered through no wrongdoing of their own.
But this worker has had so many good years that he usually just earmarks his annual bonus for his retirement nest egg.
"All this means for me," he said, "is that I am going to have to work a little longer."