A "bonus" on Wall Street is different than what is called a "bonus" elsewhere.

A "bonus" in most places is essentially payment for work results well above the norm, beyond expectation, etc. Average work doesn't warrant a "bonus", much less poor results.

The word means something different on Wall Street. There are two parts to their pay: the "base pay", which is set _before_ the work year begins, and the "bonus" which is calculated _after_ the work year ends. A "bonus" isn't payment for exceptional results: it's the part of the pay that's computed & paid after the year ends. It's the ultimate opposite of a union thing where the paycheck never changes no matter how lazy you are or how hard you work: on Wall Street you can affect your pay *right now* by working harder rather than waiting if/when for a raise.

How the "bonus" will be calculated is set in rules before the year starts. Workers may not know how much it will be ahead of time but they do know how it will be calculated.

For those lower down the food chain the performance of their group, as well as their personal performance, is likely to be the majority of the formula. For senior guys on top of the heap their formula is likely to be more of how the overall business does.

A key point is that this "bonus" is part of the pay, not an extra, and doesn't start at zero the way a regular bonus does. There is a sliding scale with "100%" meaning you get the projected amount, and more or less if you do well, the division does well, the company does well, etc.

The problem now is that the "bonus" formula is a binding contract that can't be changed. Wall Street companies can't cancel or reduce the "bonus" now any more than your boss can decide at the end of the week to reduce your pay for last week. The formula _must_ be followed, exactly as your boss is legally required to pay you the amount in force at the start of the workweek.

This results in a "bonus" being non-zero for several reasons:

1. Nobody ever imagined a case where you want to pay zero when the company hasn't literally gone bankrupt. If the company is operating, in business & alive then the "corporate profit" part of the bonus might go to zero but not the rest. This zombie half-alive bailed-out state of things wasn't even imagined ahead of time.

2. The "bonus" formula is going to have a big component for how the employee's division does. Some parts of the company have cratered but others did fine. That "bonus" formula is a contract and if your division did well they have to pay you as agreed.

3. Likewise a big part of it is individual performance. If you're a stockbroker paid to trade stocks you may have done pretty well - I wouldn't be shocked if a lot of guys did much better than 100% here (better than projected bonus).

4. "base pay" is not the big part of the pay package. The "base" pay may be enough to live on in a dumpy one-room New Jersey apartment but not more. The majority of pay is in the "bonus" part, and if the "bonus" is zero you might not be able to pay your mortgage. If the "bonus" is zero a lot of people *will* quit, not just to get more money elsewhere but to get enough money to just pay the bills.

One irony is that the fact that AIG and others can't eliminate the "bonus" pay is due to laws the Democrats and unions put in place to protect workers years ago. Pretty much if pay is promised it must be paid, and no funny business, even if things go bad in the meantime. It's likely the only way AIG and others can avoid paying the "bonus" is to declare bankruptcy, which makes employees unsecured creditors.

PS. The real mistake in my opinion is that the top executives weren't simply fired outright, for cause, for losing $100B+ dollars. I don't care about the CEO's bonus: why is he still employed at all?