Business Strategies: paying bonuses in times of hardship
Barclays wants to buy Lehman Brothers in the US, and it needs to borrow to make the deal despite the fact that it's buying a bankrupt company when other businesses are being all-but given away. The bank may or may not not be taking a UK Government handout (at present it is not but there are no certainties in the current market), but it is in line for a credit guarantee. Oh, and it's paid an investment banker GBP18 million salary benefits, and bonuses,
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As the value of pension funds and unit trusts collapse in a bank-led route of the stock markets, Bob Diamond, head of investment banking at Barclays, has been paid GBP18 million for the past year's performance. To be fair, he has a modest (in international banking terms) basic salary - it's around GBP250,000, and most of that extraordinary payment comes from performance related bonuses and stock options which, had his division not done well, would not have come his way.
For the 1,000 employees of MFI, a supplier of flat-pack furniture and kitchens which has gone out of business in each of at least three difficult market times in the past fifteen years or so, who will lose their jobs this week, the fact that the banks would not support cashflow will seem hollow.
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