WHO said there’s no Christ mas in July?
Why, this summer one has to look no further than that strange canyon of skyscrapers known as Wall Street. The stockings are full, the presents are wrapped and the mistletoe is hanging even for those on the naughty list. For this will go down as one of the most dismal for the securities industry in generations.
But that’s yet to interfere with the merriment. How else to explain the unusual “mid-year” bonus that will be doled out to Lehman Brothers’ 26,000 employees who have stuck with the beleaguered bank during the first six months of the year?
According to the pre-Fourth of July announcement, every Lehman employee will get to bank 20 percent of his or her bonus in stock, even before the dog days of summer begin to set in.
Call it a little incentive for staying around. Never mind that the last few months was a period in which a major competitor went bust, and tens of thousands were laid off.
Shhh! Santa doesn’t really have to know. You see, Lehman employees are being rewarded for sticking with a good thing while they have it. In case you’re counting, the firm has lost nearly 67 percent of its market value this year.
That’s not to say Christmas of 2007 packed any coal for the Lehman faithful – the bonus pool just six short months ago topped $9.5 billion, a 10 percent increase from the year before. Yes, $9.5 billion doled out in December ’07 – in case you’re counting that’s about 70 percent of the market value of the entire firm at Friday’s close.
As any student of Econ 101 knows, when most companies hit a rough patch, bonuses are the first things to go. But Wall Street’s bonuses are rewards for the profits produced.
But this year there are no profits, only bonuses. In fact, the announcement of the lucky Lehman payouts only juiced its moribund stock late in the week amid the logic that things can’t be that bad after all. Of course, not passing the eggnog are those long-suffering shareholders who will see their equity and share of potential profits diluted when the early Christmas party is finally over.
TERRY KEENANis anchor of Cashin’ In, an investing program that appears on Fox News Channel on Saturday mornings at 11:30. E-mail terry.keenan@foxnews.com.