The Fives: Bonuses for losing billions, golden parachutes and celebrity baby photos galore

By Todd Williams, Journal staff | Wednesday, August 20, 2008

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Monday's report that state investment officer Matt Clark received nearly $150,000 in bonuses for managing the state investments to a loss of nearly $700 million over the past year was sure to raise a few eyebrows.

In his defense, the chairman of the board that oversees Clark and his investments noted that you have to look at the long term and not just a single year.

Of course, Clark got a $250,000 bonus a year ago when things we slightly better, but apparently, that's besides the point.

But I fear we might be losing touch a bit in our high-powered, consumer-driven and somewhat self-centered society. Let me follow the money.

You've got to lose money to make money

From the department of "Yeah, but if your friends told you to jump off the bridge, would you do that, too?" the argument comes that you have to pay well and follow industry standards to keep good people such as Matt Clark.

The head of the state pension fund in Massachusetts, Michael Travglini, lost a whopping $2 billion over the past year and received a $64,000 bonus. The only comfort that we, as South Dakotans, can take away from the fact that South Dakota investment officer Matt Clark received a much bigger bonus with $147,178, is that Clark lost less money.

And the pension fund has rolled up some impressive numbers over recent years, a sign that the fund has at least been managed well. But collecting big bonuses for losing money goes against the very principles of capitalism -- or does it?

Life in the land of golden parachutes

OK, so it doesn't entirely go against everything we hold near and dear as Americans, but golden parachutes are generally misunderstood. At least a little bit.

The practice, which has widely been under fire for about a half decade now, began in the late 1970s/early 1980s. The first time it raised any flags was in 1982 when Bendix CEO William Agee launched a bid for Martin Marietta. Martin Marietta launched a hostile counter bid for Bendix, which eventually had Benidx being acquired and Agee floating a $4 million golden parachute (i.e., money he got for leaving the recently acquired company) and launching congressional action.

To deter such moves, a special excise tax was enacted that went into effect any time someone received triple their annual pay or more. But it hasn't slowed the practice much.

Whereas the business world was generally split on the practice when it began in the early 1980s, by the turn of the century, more than four of five companies had such plans.

And while such agreement are generally legal and designed to improve -- not harm -- companies, cases such as UnitedHealth Groups' William McGuire ignite passionate debate about the essential rights and wrongs as opposed to legal rights.

I mean, where else are employees and bosses paid to underperform?

Where money must grow on trees

Except, that is, in the athletic world. I mean, certainly professional athletes are the cream of the crop, the top 1 percent in the world, the rarest of the rare. But how does one stomach the likes of David Beckham getting a whopping $50 million annually to play a sport (American soccer, and by that, I mean, soccer actually being played in the United States) that virtually nobody watches.

But don't get me wrong, Beckham can still make an impact and can still play the game, albeit not as well as he once could.

What really is abominable is the practice of paying out huge contracts and then not letting them run their course but still having to pay them out. One of the most high profile of these cases was the whole Larry Brown/New York Knicks mess. Hey, it seemed like a good idea at the time.

But the match made in Manhattan rapidly turned sour, and Brown was fired from the head coaching job of his hometown Knicks after a single season at the helm of what continues to be one of the most underperforming teams in professional athletics -- at least recently.

Brown was owed $40 million. He ended up settling for a MERE $18.5 million.

That's pittance to the CEOs of corporate American get in such acrimonious splits, but it's still a little tough to stomach as prices to go to physically go see a sporting event in person begin to approach the level of a monthly car payment.

But hey, they are the top 1 percent of athletic and coaching prowess, and at least we still pay people for performance. Well, except for Brett Favre, where you're offered millions NOT to play. But I digress.

People still pay for you to perform.

Party grlllllllz and baby celebs

That is, unless you're a celebrity. I mean, they did work at one time, but when I hear about millions being dished out for exclusive rights for first baby pictures, I feel like I'm standing on solid ground that the apocalypse can't be that far away.

Leading the pack was J.Lo and Marc Anthony's $6 million for their twins. Now, I suppose you can argue they did something for their payday, although it certainly shouldn't be deemed work.

Which is more than you can say about the trend of paying celebs to celebrate their birthdays at your establishment. You see, in my world, I have to pay a business (whether it's Chuck E. Cheese or the local do-it-yourself ceramic store) to celebrate a birthday.

Not so in celebrityland.

The likes of Paris Hilton, whose status as a celebrity can turn one's head inside-out just thinking about, actually has people pay her to celebrate her birthday. And not just a little. She reportedly earned six-figures to celebrate her 25th birthday at a Las Vegas club. And Lindsay Lohan, whose partying habits are well-documented, reportedly shopped her 21st birthday party around, beginning the bidding at $250,000.

Not feeling so well? Don't give up hope. The truth is, fame is fleeting and hard work is still rewarded here in the States.   

Apocalypse now and laters

But if you want to hold on to some semblance of your sanity, stop here. I mean it. Stop here.

Imagine that you, too, could be a celebrity. Imagine that you are. The only difference is that you get paid slightly less.

How much is slightly less? Well, that's what this salary timer was designed to make abundantly clear.