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Without huge salaries, financial leaders won't try hard?

February 08, 2009|DAVID LAZARUS

Wall Street could learn a thing or two from 24-year-old video-store clerk Beatriz Corrales.

"I love movies," she said from behind the counter at the Video Hut outlet in Hollywood's Franklin Village neighborhood. "If someone can't find a movie, I go and search the Internet for them. They could do it at home, but I'm happy to help."

Surely that kind of going-the-extra-mile should merit some sort of bonus.

Corrales laughed. "No bonus," she said. "That's something I do because I like helping people. It's my job."

It was a sentiment I heard again and again from merchants I visited in the area last week. Sure, being paid a decent wage is important. And who'd say no to a bonus?

But should the prospect of extra pay or perks be the main reason people work hard at their jobs? The reason you work hard, workers and employers in the retail trenches told me, is because you take pride in what you do.

But not if you work for a bank or a brokerage or some other financial heavyweight. On Wall Street, the rule seems to be that no effort should go unrewarded -- and as lavishly as possible, regardless of how the company's doing.

We got yet another reminder of this culture of smug entitlement when it was reported last week that Wells Fargo & Co. had been planning to send employees to a pair of high-end Las Vegas resorts.

The trip drew scorn from lawmakers, who were quick to observe that this was questionable behavior for an institution that recently received $25 billion in bailout money from taxpayers and lost $2.55 billion in the most recent quarter.

Wells Fargo initially defended the Vegas getaway. But within hours the company announced that the trip had been canceled and blamed the media for spreading "intentionally misleading" reports about what was actually "a four-day business meeting and recognition event for hard-working team members."

Where have I heard that before? Oh yeah: In October, when insurance giant American International Group Inc. sent workers to a luxury spa after receiving $85 billion in bailout funds.

"It was not an executive retreat," an AIG spokesman told me at the time. "It was a meeting to reward and incent independent sales agents."

"Recognition event" . . . "reward and incent."

Where do they get this gibberish?

Look, don't get me wrong. I'm all for rewarding achievement. (Note to editor: Really.) But all bets are off when a company is failing so miserably that it has to pass the hat among taxpayers to survive. Heck, my employer is bankrupt, and we haven't shaken down Uncle Sam for some spare change.

What sizzles my bacon is the expectation among our financial friends that the bonuses and perks should keep rolling in. Otherwise, presumably, they won't be motivated to give it their all.

"I don't need to be motivated to do a good job," said David Jones, 40, manager of Counterpoint Records & Books in Franklin Village. "I either want to do it or I don't."

OK, but wouldn't he want an all-expenses-paid trip to Vegas for a job well done?

"Not Vegas," Jones replied. "Maybe the south of France." He smiled to show he was just kidding.

"I like what I do," he said. "That's the motivation."

You'd think the 598,000 jobs lost last month -- the largest one-month loss in 34 years -- would be enough to instill a sense of humility in even the most self-important workers.

Yet the day after Wells Fargo scratched a trip to the blackjack tables from its to-do list, President Obama felt it necessary to propose that, from now on, senior executives of companies receiving "exceptional" bailout funds will have their cash compensation capped at $500,000.

Obama didn't name any names. But more than a few observers noted that Bank of America Corp. Chief Executive Ken Lewis received compensation valued at more than $20.4 million in 2007 -- $1.5 million in salary and more than $18 million in bonus money, stock and other benefits.

BofA lost $2.39 billion in the most recent quarter and so far has received $45 billion in bailout cash.

The question is: Would Lewis still give the bank his best effort for a measly $500,000 in pay (not including all the stock he could still get for his trouble)?

Paul Dorf, managing director of Compensation Resources Inc., a New Jersey consulting firm that advises companies about how to attract and retain top execs, said probably not.

"Being a CEO of a financial company is very tough," he said. "Why would I want to do that for only $500,000?"

I don't know, maybe because these are people who are leaders, and leaders are supposed to lead by example.

Unfortunately, Wall Street clings to the notion that the only way you can get people to perform their best is by bribing them. In 2007, the latest year for which figures are available, the average bonus across all pay grades was $177,000.

That was on top of salaries that averaged $223,000, according to the New York comptroller's office.

At Video Hut, Corrales told me about the time a customer came in seeking a certain Matt Damon movie but couldn't remember the title or the plot, only that it co-starred Al Pacino but it wasn't "Ocean's Thirteen."

Corrales said she dropped what she was doing and did some Internet searches. She brainstormed with co-workers. But she came up short, because there are no other movies in which both Damon and Pacino appear.

Corrales said she didn't feel bad about the wasted effort. This is what she's paid to do.

There's a word for this: motivated.

Maybe Video Hut knows something that Wall Street doesn't.


David Lazarus' column runs Wednesdays and Sundays. Send your tips or feedback to

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