mortgage trader at GS goes to arbitration over disappointing $8m bonus
"helped the bank earn more than $7 billion" ... http://www.bloomberg.com/news/2014-06-18/ex-goldman-trader-says-bonus-c…
but hey, good to hear that mortgage traders are making decent money again. last time they weren't, it was a uh ... very bad time for the rest of the world economy.
if you can prove you contributed to the billions in gains for the firm, then you should be entitled to it. GS should be happy to pay extremely successful traders huge bonuses, means they made large gains.
A good friend was a top GS trader who was making crazy money, similar to this guy. My friend would fully acknowledge that it was more about the platform than any special talent that he had. From his perspective you had to just not screw it up. He would also admit that he likely wouldn't have the same P&L at one of the other BBs. A big part of P&L is being plugged into the right seat in the machine. At GS you often have better information, better systems and a better team...that is a big piece of the success of an individual trader.
And that's why so many traders over the past decade plus have left shops like GS, started their own fund or joined a newer start up fund with decent seed AUM and blown up.
The "99%" idiots are already all over this, but the fact is if he actually made them $7 Billion like I've read, I think he deserves more than 8 and a quarter mill. Hell he's only asking for less than twice that.
The comments on that article...
Sure resources/information are probably important. Having a good team is arguably more important, but that's a function of hiring and training good individuals. Also it doesn't seem like timing/executing the subprime mortgage short is a skill that's necessarily interdependent on an edge in info/resources. Jamie Mai did it with arguably less of an edge in that respect, while Deepak Narula may have had similar resources but was too early. Relative to majority of his peers at GS, the guy earned more. As for why the team may have earned a smaller fraction of revenues versus other desks, reputational reasons probably rank high.
Anyways, not exactly the best idea to discuss a squeeze in a performance review. Interestingly enough, Birnbaum is doing pretty well for himself at his startup fund. Maybe Deeb should've taken up the chance to join him.
Unless he has a contract, he's not entitled to anything, as his bonus would have been discretionary. If he did have a contract, he would have no need for arbitration.
He ain't got a case, IMHO, and he should stop taking a piss...
Never tell your mother your expected bonus... no good can come out of it.
I loved that part of the story. Who the F cares if he told his mom about it? Is that some new legal defense, the "I told my mom so it's true" theory of law? Or because another senior trader said he's a steal at $15MM? I don't know if some of these things are taken out of context for a news article, but this may be the dumbest lawsuit at that level that I've ever heard of.
Too many, this sounds a bit of shock cause we're talking about millions. But god damn, if he made 7 billion dollars, he should get hell of a lot more.
He didn't make 7 yards personally. He contributed to the work of a team that made that money. There's a world of difference. He didn't have a contract that defined his cut in a formulaic fashion, which means, again, that he ain't got a shred of a case.
What a retard. The guy seems like a whiny bitch, and I'm usually on the side of finance guys.
His contract did not specify that he would be entitled to a discretionary bonus that amounted to X% of PNL. Technically, Goldman can do whatever they want. If he was unhappy he could've left at any moment.
Working on a flow desk doesn't require too much skill, so his claim that he made $7 billion for Goldman is absurd. On the flip side, Mark McGoldrick, the former head of Goldman Special Situations Group, had a decent argument that he was underpaid when he got his $70 million bonus.
He deserved much more than he was asking for BC he made the firm 7 billion!
He deserves so much money! He made the firm 7 billion $!
A buddy of mine at a corporate treasury made his firm $150 million last year. Does that mean he got a $1.5 million bonus? Not a chance. He didn't even get 0.01% of P&L.
Just because you have a great seat doesn't mean you deserve to make tons of cake.
The fact that he doesnt have a fixed% in contract essentially makes this pointless.
But as discussed above, you have to distinguish what the value of that seat is. I would argue that a huge amount of traders and sales at banks are not actually adding that much alpha, but they will be very quick to point out how much pnl they have generated. The problem is twofold: 1) they are not providing the capital, they are being employed by someone with capital to manage it 2) they are very likely in a franchise seat
point 2 is why at a bank you can have one guy make 20m and one guy make 100m for the bnak and yet take home the same bonus. Because 80m of that 100m might have just been "franchise pnl", or pnl generated that would have been there had a monkey been sitting in that seat, whereas the other guy might have a franhcise pnl of 0. Its an important distinction and one that is considered by heads of trading floors come bonus time.
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