Thursday, June 01, 2006

Bonus?? Bonus???

I mentioned a few weeks ago that I've had a lot of jobs, but I would also have to admit that most of them have not been in private industry. When I was in high school I caddied; I put in a couple of stints as a pizza baker; I even spent years teaching prospective law students how to get good scores on the LSAT, and a lot of them are now lawyers. I was good at it, too. Still, the bulk of my life I've worked for nonprofit organizations that don't plan or hope to make money.

So maybe I just don't understand why big companies give out bonuses. I always assumed it was to reward outstanding performance or effort, but the Times today suggests otherwise. In fact, according to this story, a lot of these guys are getting bonuses just for dong their job, or even for doing their job pretty badly.

Take the case of the News Corporation. According to the Times:

Some employment agreements actually stipulate that they will provide bonuses even if company performance declines. The agreement struck in 2004 by Peter Chernin, president and chief operating officer of the News Corporation, entitles him to a bonus even if earnings per share fall at the company. If earnings rise by 15 percent in any given year, Mr. Chernin's bonus is $12.5 million. But if they fall 6.25 percent, Mr. Chernin's bonus is $4.5 million, and an earnings decline of 14 percent translates to a $3.52 million bonus.

Or complying with the law. The story talks about a number of executives who got bonuses for complying with Sarbanes-Oxley, which they were required to do anyway. "Good job, chief. Here's a couple of mill for not getting tossed in the slammer."

As I say, I guess I just don't understand.

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