Measuring Up

Speaking Up Podcast

In the second installment of the Speaking Up Podcast, Ed and Sam are joined by Matt Purdue to discuss who is influencing who in the tangled web of media, the blogosphere, consumers and the state of our economy, especially in the financial sector.

To play the show, click the blue arrow icon below. To save to iTunes or other mp3 software, right click the link and "save target as."

TOTAL LENGTH: 17:00 Download Speaking Up #2

Going After Charities Makes Little Sense, Mr. Obama

I want our president to succeed. And, he has my support regardless of whether I agree (or not) with some of his latest economic policy decisions.

But, one in particular makes almost no sense. And, it actually runs counter to what Mr. Obama’s core societal (and campaign) beliefs are. So, I’m really perplexed and decided to write about it.

There is little doubt that if our president either cuts out or limits the value of deductions for charitable gifts from “the wealthy” (those earning more than $250,000), he will be biting off his nose to spite his face. 

Current estate tax laws allow for people in this income bracket to deduct charitable contributions at a reduced rate of 28 percent (from a rate that used to be 35 percent).

According to Congressional Budget Office official estimates, this will have a dramatic impact on the amount of giving that takes place in the future.  This government office believes that life time donations will shrink between six to 11 percent, equaling $11-26 billion annually.  Wow. That’s a lot of money.

What does this mean? Well, in these tough times, I suspect that some of the most worthwhile smaller charities, non profits, colleges, etc., simply won’t continue to receive the type of support that they depend upon to keep their doors open. Because many of these charities are already reeling, some will shutter those doors, others will completely scale back on their core mission or charter. Other, larger and more established organizations will certainly survive. But, at what costs. Will this seriously hurt the amount of food and shelter that homeless organizations can provide? Will charities working at light speed to find cures for heart disease, diabetes and cancer need to throttle back their efforts? And, will community groups in inner cities be forced to curtail the resources given out to teach under privileged children how to read and survive in a tough world?

I’d say the answer to all those questions is probably yes. Sure, donations will continue from the wealthy (although there is a lot less wealth to go around these days). Because people do care and want to give back. But, the reality is that this tax break made it so much easier for giving to become a year in, year out way of life. And, that will now be stunted.

It truly is ironic. I believe that our president really cares about more Americans “taking part in a greater cause,” and helping others in need. Yet, these actions would say otherwise.

I know the man has some incredibly tough choices to make as he thinks about how we will pay for all of this spending. But, hurting those charities and non profits that help the neediest causes our society most, isn’t the way to go.   This makes me wonder how a man so committed to those who need the most…has gotten it so wrong.

Universities go to school on one unfortunate manufacturer

Russell Corporation, a leading manufacturer of sports apparel, is learning a painful lesson in the world of licensing.  And the properties that have licensed to Russell have a painful lesson of their own.

Yesterday, the University of Michigan announced that it would officially end its long standing licensing agreement with Russell to create branded sweatshirts, t-shirts, fleeces and other clothes with the college logo/brand on them.  Michigan joined Duke, Georgetown, Columbia, Cornell, Purdue and a host of other big time universities that have also ended relationships with Russell over the last few months.

All of these universities belong to an organization called The Worker Rights Consortium, a factory monitoring group (sponsored by 185 universities). On February 18th, this consortium condemned specific human rights violations taking place in one of Russell’s manufacturing plants in Honduras. It seems that the plant was closed on January 31st  because almost half of the employees had joined a union and a large dispute occurred when management stepped in. Another monitoring group, the Fair Labor Association, also found a number of serious labor and human rights violations.

In a report last week, Russell management confirmed that mistakes were made. A direct quote from the company stated, “We acknowledge that management mistakes were made that led to a failure to adhere to standards on freedom of association.” The company vowed to improve its compliance and hence what it called “its overall corporate social responsibilities process.”

Unfortunately, for this licensee, these apologetic admissions are too little and too late. I don’t know how lucrative the company’s license agreements are with its university partners. But, it’s safe to assume that all of these manufacturing agreements add up to quite a sum of revenue. And, now the domino effect is clearly taking place as one university after another is stepping forward, undoubtedly loosening Russell’s long standing industry hold within the higher education market.

It’s equally safe to assume that Russell has generated millions in high-margin royalty revenue for the University of Michigan.  Collecting sizeable royalty checks is a benefit of licensing– no question.  But with that benefit comes significant labor responsibility for the licensor or its representing agency. Where was the oversight?  Where was the contractual clause that allows University officials to inspect licensee business practices to prevent usage of factories culpable for these violations? 

This news is by no means a surprise. Manufacturers and brand owners across the globe have challenges like these. And, sometimes they are hidden in dark corners, without management even having a clue that they exist. That said, this is by no means an excuse. The executives in our licensing division stay awake at night thinking about this very issue. When we connect our clients (licensors) to those manufacturers who we believe will be a good match, one of our first priorities is to ensure that these companies uphold the highest human rights, quality and environmental standards in all their operations. And furthermore, our licensors retain– and leverage– the right to audit, inspect, evaluate, and if necessary, mandate cessation of any factory practice inconsistent with the values of the brand.

Manufacturers demand that our clients’ brands be above reproach (after all they are investing real money to license that sterling image.)  Russell has certainly enjoyed that with properties such as Michigan, Duke and Georgetown. Licensors cannot want to wake up in the morning to read that their partner has unsanitary worker conditions, serious quality issues or (in this case) abused human rights.  Not only will licensors have a miserable PR situation to manage, but they will be forced to change licensees, at potentially less advantageous financial terms.  Aside from making money, the key goal for any licensing program is to extend brand equity into new product lines, distribution channels, and consumers. Through this, both parties can also greatly enhance their image with core constituents who already love the brands for what they stand for.

Whether from a pure public relations standpoint point, or because of valuable licensing deals that are on the table, licensors and manufacturers both need to consistently audit plant operations so that they neither  become parties to the now defunct University of Michigan/Russell Corporation license agreement of tomorrow. This is a valuable lesson for so many companies who depend upon licensing programs as an important additional ongoing revenue line. Maybe, just as importantly, it provides a sobering reality that violations like this (and the publicity that comes with it) will only serve to undue all the brand and revenue building that was created in the first place.

“Expect the worst and you may get it"

This was the catchy headline message from Robert Shiller's, New York Times piece yesterday. His premise is quite interesting. Based on historical data, it seems that the more we (Americans) talk about an impending depression, the more likely it is going to become a reality.

Everyone thinks that the 1930s Great Depression was the largest to hit our country. Not so. According to Shiller, we had two pretty significant ones in the 1870s and 1890s, as well.

He claims that it's important to understand that each depression was partly driven by the retelling of earlier depression stories. In fact, in the 1930s, there was such incessant talk about the previous depressions before, that this partially led to a reduction in consumers' willingness to spend and businesses' want to hire and expand.

Thus, the Depression storyline could easily end up as a self-fulfilling prophecy for us now.

It's also interesting to note that in each depression, an "accident" created a way out for America. For the ones in the 1870s and 1890s, the combination of European famine and a hugely successful crop at home stimulated our economy. And, of course, we all know how World War II greatly alleviated the economic pain of the 1930s.

So, if one believes this analysis, it seems to make sense that we (as a nation) need to stop obsessing and communicating so many negative fears about this terrible economy and start focusing (and acting) more positively about what's to come. Of course, that's not an easy thing to do. This strategy clearly needs to begin with our President. It's time for him (and his administration) to start reinforcing why this stimulus plan will work. They need to provide real details that we can believe and also should stop worrying about the political blame game. Meaning– we all know that George Bush helped to get us into this mess. There is no longer a need to continue to dwell on the fact that Obama’s administration didn't cause this economic downturn, and it will "take a long time" to get out.

Next, we need to find a way to create trickle down positive thoughts. If these optimistic viewpoints could make their way to state and local politicians, business executives, our media, the blogosphere and finally the American public, well... we just might fool ourselves into thinking that this recession will dissipate sooner than we think and the D-word was just a bad dream, with no chance of becoming a reality.

But, how do we really convince ourselves that life will get better? Maybe the real trick is to start putting faith in one component of our economy or society that will save us from this ugly malaise (i.e. "the accident.") Could it be the billions of dollars that will soon fuel alternative energy technologies that will change our fortune? Maybe, when we remove our hundreds of thousands of soldiers (and billions of $$$ in cost) from Iraq, we'll see an upbeat surge in consumer behavior? Maybe, just maybe the media will actually get sick and tired of writing about all the negatives and decide that they will be the collective group that brings the wind of change by only focusing on those nuggets of happy stories/indicators that exist, but are never in plain view. This in turn will create a ground swell of positive sentiment, changing our perceptions for the better. (OK, this one is clearly a long shot.)

I don't know what will change our luck. If I did, then I probably would have already bet my farm on it and certainly wouldn't be writing this blog. But, I do know that this is one blogger who can do his share by trying to avoid past mistakes. My doom and gloom depression-discussions are history now. It's time for me to look for positive signs and figure out new ways to prosper. Hopefully, that one small step will begin to make our day to day lives a tad more gratifying.

Instant coffee will most certainly water down the Starbucks' brand.

Yes, I'm writing about Starbucks again. Contrary to what you might think, I’m not obsessed with this coffee chain. It's just that I find the consistent business decisions by this company's leadership to be so inconsistent with what it takes to build a successful brand. And, that makes the topic interesting to comment about.

Today, Starbucks announced that it is expanding into the instant coffee business. Howard Schultz (company CEO), claims that "This is not your mother's instant coffee." More to the point, he states that thousands of people have tasted this coffee blind and that he plans to reinvent this category with a greatly improved level of smooth tasting instant coffee.

Schultz goes on to also say that this is not a desperation move to increase sinking revenues and profits in the current recession.

Some will view this brand extension as a "mug is half full" opportunity. After all, Starbucks has successfully extended its brand through licensing into products like ice cream and added new distribution lines by selling coffee on airline flights and in packages directly through supermarkets. These strategies have made the company money and served to positively extend the brand experience because the attributes associated with Starbucks (high end, luxury, gourmet taste) were duplicated (or at least not diminished) through these business decisions.

I applaud Starbucks for leveraging the brand's potential in all of these cases.

Now, think about instant coffee. Yes, there is money to be made. (It's a $700 million industry.) But in the US market, this product is most associated with those who can't afford to buy any type of gourmet/expensive foods, or who are simply too old to care.

Starbucks is taking a tremendous risk with its brand by extending it into such a low-brow food category. It's betting the farm that it's new recipe for instant coffee is so good that it can either raise the brand attributes associated with instant coffee, or if it doesn't, the product will still have enough appeal (at a low enough cost) to prevent bastardizing the Starbucks image and cannibalizing what it currently sells at the retail front.  

Starbucks has shown bouts of schizophrenia before. The company ventured into other lower end foods in the past and failed miserably. Breakfast sandwiches (with egg and sausage) served at its own stores took away from the coffee aroma and European barista atmosphere that the company so carefully created over two decades ago. Understanding this, Schultz banished those foods last year when he became CEO again.

When its main retail coffee experience lost control of quality and the products took on an inferior taste, the brand suffered as well. Once again, its CEO stepped in to bring standards up to snuff.

Any organization looking to extend its brand needs to truly understand why it has equity and trust with its customer base. And, then it needs to protect those critical attributes and qualities that keep customers always coming back.

Starbucks newest extension feels less like innovation, and more like desperation to increase short term sales at the expense of its long term brand. Even if that isn't the case, this company will water down its image through instant coffee.

Anyone interested in a $7,000 suit? Bueller...? Bueller...?

Saks Fifth Avenue is spitting this ugly recession in the eye. Yes sir. This upscale retailer just opened its newest, and most luxurious (and exclusive, I might add) men's suit store right in the heart of Rockefeller Center.

You see, after years of wooing, Saks finally convinced Kiton Apparel, one of the finest upscale tailors in Italy, to allow for selective distribution of its individually sewn, finely made suits. The products will be sold off the rack at $7,000 a pop, at Saks' new 2,000 square foot boutique store.

And, Saks' executives don't regret this haughty decision at all. Its chief merchandising officer and president is quoted as saying, "...I wouldn't undo this decision. A store like Saks needs to have the best product available. And, I do think the man who wants to present himself in a certain way, he's still out there."

Let's see. Might that man be Bernie Madoff? No, maybe it's Rick Wagoner of GM or John Thain, formerly of Merrill Lynch. OK. Those were cheap shots. But, come on. Launching (no, publicizing the launch) of a store that sells $7,000 off the rack suits in this economy seems pretty crazy. Right?

According to this New York Times article (link to article below), the fabric that these suits are made from is simply to die for. That said, they are still off the rack. Even in just a mildly bad economy, most upscale businessmen could do much better by purchasing custom made, exquisitely tailored suits that fit perfectly, for a third of the price that Saks will be charging. That's what talented Hong Kong suit makers do.

Now, let’s look at today’s economic reality. Austerity is the word of choice in  2009. And, most of those super rich men who once might have been target prospects are now humbly wearing last year's custom made models, feeling quite content with their ‘09 (and probably 2010) business wardrobes.

Saks' earnings are terrible. The retailer has laid off over 1,000 employees and didn't escape having to mark down a significant portion of its high end merchandise by 50-70 percent over the Christmas holidays. So, I'll ask the rhetorical question: What makes this troubled retailer believe that it can buck this woeful trend and succeed with a new high cost proposition now?

Maybe, I have it all wrong. Just maybe, Saks' management is taking a long term view of this situation. Maybe, they are planning for a terrible 18 months and then, with Kiton in hand, the company will emerge looking better and feeling stronger because of it. Here's the problem with that assumption– retailers only operate in a myopic, near sided world. So, in 18 months, with loads of expensive inventory still hanging from the racks unsold, chances are this individual boutique won't still be around to talk about ‘the future.’

Ironically, what baffles me the most is that this story was featured on the front page of The New York Times Business Section. PR professionals can sniff out how a story was created. And, this one smells very strongly like it was proactively pushed from Saks to this reporter. I could be wrong on this point. But, if I'm not, I just can't understand why Saks would want to scream out to the world that it is so insensitive to today's economic woes and the calamity that has hit so many hundreds of thousands on Wall Street and in New York City. In my mind, it follows the cliché that we often live by– all publicity is not good publicity. This may have created visibility for the opening of a new store, but it also shows how out of touch one high end retailer actually is.

Ms. Obama… be flattered that your daughters are dolls

Today, Michael Dresner, president of our licensing division, has written the following special guest post.

On February 3, Ty’s Toy Box ceased offering ‘Sweet Sasha’ and ‘Marvelous Malia’ dolls following a week of merciless media coverage. "We feel it is inappropriate to use young, private citizens for marketing purposes," First Lady Michelle Obama communicated through her press secretary, Katie McCormick Lelyveld.  When the products were taken off the market, Ms. Lelyveld said “We appreciate the company’s response to this matter.” I take a leap with the next sentence– the words of Ms. Lelyveld drove the media criticism, which drove what is essentially a product recall. Now that the dolls are repackaged as ‘Sweet Sydney’ and ‘Marvelous Mariah,’ I challenge Ms. Lelyveld– and her boss, the First Lady– to explain what they accomplished. 

            OK.  Michelle Obama was clearly frustrated.  As an everyday parent who wants his children to have a normal life, I can accept that. 

            But Ms. Obama is not an everyday parent.  And, her children will not have a normal life.  Ms. Obama made those choices for her family when Barack Obama launched the White House run.  Sasha and Malia now have every opportunity that can bestow an American child. And with those opportunities, they are a part of the public eye forever.  Will a doll line exacerbate that?  Try googling the phrase “Sasha and Malia.” Five MILLION links. Does Ms. Lelyveld plan on pursuing all of those too?

             Ty’s Toy Box did “use young private citizens for marketing purposes.”  But how are the toy company’s actions any different than the books, magazines, television programs, posters, t-shirts, and ice cream pints bearing images of the Obama family?  Purveyors of this merchandise are in it for the marketing purposes too.  To my knowledge, no magazines have been recalled.  No TV show had to be shut off midstream.  But Sweet Sasha and Marvelous Malia had to be taken off the market.

            Ty’s Toy Box clearly tried to leverage the mystique of the Obama daughters.  But, rather than being outraged, is it possible to be touched?  To recognize the impact that these graceful, intelligent, gorgeous children have had on the global psyche?  To take pride in the astounding accomplishments the Obama family has enjoyed over the past year?  The nerve that Ty’s Toy Box clearly touched is not a negative statement about business.  It’s a positive statement about the First Family.

            Perhaps, if Ty’s continued to sell these dolls, they would have generated profit for vendors and themselves, helping the economy and providing jobs.  Perhaps Ms. Obama could have asked Ty’s to allocate some profit toward the educational, infrastructural, and economic deficits that now plague our country.  Perhaps Ms. Obama could have publicly congratulated Ty’s on their ingenuity, while respectfully asking that Sasha’s and Malia’s parents be called the next time someone wants to create dolls that commemorate them.  The First Lady would have gained respect, and Ty’s would have maintained a new business driver.

            But that did not happen.  Ty’s Toy Box had to cancel a product line that people clearly wanted to buy.  Ms. Lelyveld and Ms. Obama– you have no more privacy.  You have no fewer marketing interests in the First Family.  You have no dissipating fascination with your genuinely sweet and marvelous children.  So whatever you tried to achieve, I hope you got it.  Because in the process, a good company suffered.

Knowing when it’s time to go on the offensive…

The peanut butter crisis is wreaking havoc among millions of scared consumers who love to eat this product. People have died and thousands have reported related illnesses. It sure seems that every day a lot of misinformation is reported by media (and throughout the blogosphere) about the Peanut Corporation of America (the culprit) and others who might be involved.

The net result is that the peanut butter industry has been severely hurt. Sales are down 25 percent and this number continues to grow.

With all of that said, I generally like the way Jif, Skippy and Peter Pan, the three main competitors in this industry, have quickly changed their approach to deal with this dangerous situation. All three brands (owned by major corporations: JM Smucker, Uniliver and ConAgra respectively) aren’t passively hiding in bunkers, hoping that this crisis will subside soon and their customers will all come running back. No, instead they have aggressively communicated through regional/national advertisements, press releases and their own web sites (check out home pages of each) that their products have in no way been tainted. I’ve also seen one or two industry articles where representatives of each brand have given a quote reinforcing the same.

Through a combination of intuition and experience, the best crisis communications professionals sense when it’s time to go from a purely defensive (let’s wait and see) posture to a mildly proactive stance to an all out offensive push. When mass confusion about the industry and rampant speculation about staying away from all peanut butter brands hits the rumor/gossip mill, it’s time to churn out non-stop communications across every medium until the truth is really believed. And, that time is now in the peanut butter industry.

As much as I applaud these three brands, I’d recommend that they step up their activities even more in two key areas to achieve this end:

1.) Building stories about themselves and why their product is safe – Again, each brand has issued a press release and has taken part in a few interviews. But, I have yet to see any larger feature stories surrounding their peanut butter products that negate any safety concerns. I recommend an all out media blitz leveraging TV, radio, print and online media to communicate this important story. It will quickly make a huge dent to end speculation.
2.) Reacting to the rumor mill blogs that are influencing millions – After searching for just 15 minutes, I found over a dozen blogs in which scared and outraged mothers continue to post comments that greatly help to spread this forest fire. But I’ve yet to see representatives from these brands actually go on these blogs and post statements highlighting the truth. Some of these blogs actually have posts instructing moms to stay clear of all peanut butter now. That’s just wrong. Companies need to control incorrect information being spread about them. The only way to do this is to actually get tuned into the blogosphere and then correct all the false comments.

This crisis will eventually subside. But, will it be after the industry loses another 2 or 20 percent in sales volume? How those three key leaders react now will largely make the difference.

Obama’s Blind Spot

Just two weeks into the new administration, I’ve already started to question some of Obama’s recent decisions. Of course, I’m not alone. The media, political pundits and those in the blogosphere are scrutinizing every single move he makes. It’s much too early to become overly alarmed. I, for one, truly hope Obama succeeds, because lord knows we need it to happen.

My brother (a Democrat and liberal leaning American who supported Obama,) sent me the following email this morning about some initial worries he has about our President. He’s also added some specific thoughts on what lawmakers need to do to help stimulate our economy. Thanks, Mike.

Somewhat surprisingly, (because my political beliefs never match his) I agree with everything Mike has to say.… and have added one or two other recommendations as well. How can a liberal and a moderate republican agree on the same means to a political (and economic) end? My theory is that traditional conservative, moderate and liberal views are basically thrown right out the window at a time like this. This is all about stimulating an economy that isn’t lending, spending or doing much of anything. So, no one is (or should be) talking about why “rich” Americans make too much money (maybe because so many aren’t rich now.) And republicans aren’t condemning those without jobs or homes now as being “lazy” or “too dependent on the government” (because hundreds of thousands are now in this same lifeboat.)  Here’s what Mike has to say:

“As much as I respect the man, I believe that Obama has a giant blind spot.  He trusts and believes in people more than evidence shows he should.  This bit him during his candidacy with the Reverend Wright.  Instead of reviewing the evidence and determining that “Yep, I need to disassociate from this guy,” he continued to defend him until Wright threw Obama under a bus.  The same thing happened with Daschle.  Clearly, Tom Daschle is an ethical mess and has been for some time. Yet Obama trusted him because Daschle was a tireless campaigner for him.  So when Daschle is $128K short on his taxes (another clear ethical lapse,) the first thing Obama does is say that he stands behind him.  Instead, he should have looked at the reality of the situation, cut ties, and run quickly away from this selection.

So what does this mean (besides all the jokes about “Does anyone in the new president’s administration pay taxes?”)? It means the following:

•    Obama is giving up the moral high ground because he’s too loyal to people and is willing to change ethical stances based on loyalties.
•    Folks are losing trust in Obama.  If he says “I screwed up” on Daschle, will he say the same next year on the bailout plan?

On that note, I’ve been reviewing the various proposals.  You know I’m a Democrat, but the Republicans are making smart points on the sweeping progressive agenda that the house democrats are inserting into the package that has little to do with shoring up our mess.  So here’s my idea of the “core” of a bailout package, based on what I’ve read.

1. Shore up the states.  This includes funding for Medicare and education and keeps the situation from getting worse.
2. Eliminate the payroll tax for a few years. This puts 6.2% back into the pockets of employees and the same for employers.  A 6.2% raise is more likely to make people spend money than $500 doled out $20 a week.
3. Reduce the mortgage rate to 4% and don’t require a credit score of 10,000 to get this rate.  Make at reachable by those that have “good” credit, not just “amazing” credit. Allow refinancing and second home loans to get this rate.  Allow investment property to get this rate.  This provides an immediate jump to the housing slump.”

I’d also add a key fourth point to Mike’s list.

4) Help small businesses. Small businesses have generated 60 to 80 percent of net new jobs annually over the last decade. Boy, do they/we need some special incentives.  A good start would be to eliminate all capital gains taxes on small businesses (per Obama’s recommendation.) And, I also agree that there is just too much weight put on the small business owner shoulders because of having to pay both employee and employer side of the payroll tax. We need to stop making employers pay for the employee pay roll tax and give the employee a $500 “Making Work Pay” tax credit to support this handed off new burden.

How Much Does $18 Billion Really Cost

Last week’s news that Wall Street parceled out about $18 billion in bonuses more than incensed Americans and their legislators.

There’s no doubt that from a pure public relations standpoint, this collective hand out was really stupid. Do these CEOs have amnesia? It wasn’t 60 days ago when a civil war like- battle erupted pinning “Main Street against Wall Street” as the Treasury Department (lead by then secretary Hank Paulson) pleaded for Congress to write a $700 billion dollar check to bail out many failing financial institutions. To offer up bonuses to many in the rank and file so soon after this near death disaster, makes little sense and has certainly killed any lingering positive (or even neutral) perceptions about Wall Street that could have existed among the American people. No doubt, it will take a long time for trust to be rebuilt and any forthcoming bailout money will be scrutinized by Congress like never before.

But, putting aside this public relations nightmare (for a second), did Wall Street firms actually do anything wrong by letting many take home end of the year bonuses? I’d say that there is no cumulative black and white answer, just a lot of shades of gray.

Let’s talk about the clear negatives first.

-    Bankruptcy versus Bailout – The most iron clad point against Wall Street (in my mind) is that firms like Citi Group, AIG, Wachovia, Merrill Lynch and many other smaller ones were one step removed from going under. The government had to step in to either directly provide financing or help more solvent banks buy up these terminal companies so that they wouldn’t fail. If these companies had gone bankrupt, I can assure you that any bonus pool would have been close to zero. So basically, many of them financed the bonus compensation for their employees with government…uh…make that tax payer money instead of using the full sum to become “healthier.”

That is just deceptive and wrong. The firms/banks that fall into this category should be punished now.

-    Public companies – how can they justify? – The other argument I’d like to make is that many of these bailed out firms are public entities. So, while their stocks have lost 75-90 percent (in most cases), senior management still found a way to reward many through undeserved bonuses. Public companies serve shareholders first (not employees). Employees of public companies share the risk when their organization has a bad (or in this case God awful) year. Even if some departments within a particular area of a bank do well, that really should have little bearing on how compensation is doled out when the organization has made such fatal business decisions, wiping away untold amounts of shareholder equity.

Now, here’s the gray:

-    Many companies aren’t included in this bad lot and shouldn’t be – My bet is that there are a lot of mid-sized and smaller financial services players who didn’t receive bail out money and whose organizations weren’t close to failing (like those mentioned above). I actually know a few of them. Of course, propaganda isn’t pretty and all of Wall Street has been demonized through the president’s well calculated comments last week. If the average Wall Street bonus is about $110,000,  it’s important to keep in mind that the lesser known (and less publicized) firms handed out smaller sums of money that probably fell within acceptable ranges based on the fact that these organizations deserved them.

-    Bonuses are actually part of overall compensation – This is true. In fact, there are a lot of investment bankers who might make approximately $200,000 salary and then another $5 million (or more) in bonus money every year. Now, cry me a river for those bankers…because no one really cares. And again, if their banks are among those that made terrible business decisions and took tax payer money to survive, then they should just be glad that they still even have jobs moving forward.

Where I see gray are those smaller bonuses (like below six figures) handed out to lower rank and file employees from the healthier firms who depend on that money to live very average lives. Without them, their pay may be too low to adequately pay monthly bills while living in or around New York City.

In the end, my brief analysis doesn’t really matter because public perception of Wall Street is as negative as I’ve ever seen it. Ironically, most firms don’t hand out bonuses until February or March (kind of makes you wonder why so many banks snuck them in early this year, eh?). State and federal politicians, prosecutors, the media and consumers-at-large are downright angry. And, many smell blood in the air. I’d say that this collective $18 billion bonus pool is but a fraction of the real cost that this industry will be reeling from for years to come.