Just a bunch of ‘lucky’ stiffs

By DOLPH HONICKER

A man can be rich, but only a nation can be wealthy. And if any person of any age suffers from poverty, then our whole country bears the shame.

--Walter Mosley in the Oct. 23 issue of The Nation.

There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.

--Warren Buffett

Who says the American economy is not booming? The cup not only is half full, it’s overflowing.

Yes, Virginia, there is a Santa Claus, especially if you are an investment banker. For instance, John Mack, chief executive officer of Morgan Stanley, was to be awarded a Christmas bonus in 2006 worth about $40 million in stock and options for 2006, according to the Washington Post.

That’s a nice hunk of change. But it gets better.

At Goldman Sachs, jaws dropped on Wall Street as the investment bank reported that profits soared 93 percent. As a result, its CEO, Lloyd Blankfein, was in line to receive a record compensation exceeding $50 million in his Christmas stocking.

The New York Times quotes Michael Holland, chairman of Holland & Company, a New York-based investing firm, as saying: “Anyone at the bonus line at Goldman Sachs died and went to bonus heaven. It doesn’t get any better than this.”

But CEOs were not alone in being awash in greenbacks. Outside directors at hundreds of American companies received option grants that were likely to have been manipulated, says a new study printed in the Washington Post.

It reported that 9 percent of 29,000 option grants to outside directors from 1996 to 2005 were granted on a day the company stock hit a monthly low. “The likelihood of such a concentration of ‘lucky’ grants is so low as to be statistically impossible,” say the study’s authors.

Post writer Terence O’Hara quotes Lucian Bebchuk, a Harvard University professor who co-authored the report -- “Lucky Directors” -- with Cornell University’s Yaniv Grinstein and Urs Peyer, a professor at the

French business school, as saying:

“It’s like going to Vegas thousands of times and betting on red every time and winning more than half the time. From a numerical standpoint, it can’t be random. There has to be some manipulation in the outcome.”

Of the more than 130 firms that have disclosed probes of their options-granting practices, only a handful of CEOs have been canned.

The latest study is the first focused solely on grants to directors. Oddly enough, another study, this one by the Corporate Library of 120 companies implicated in backdating, found a high incidence of interlocking directors who served on more than one company that backdated.

Ain’t America wonderful?

Retired teachers, police officers and firefighters and other public workers might differ.

As state governments cut benefits, set aside money to cover future costs and shift expenses to the federal Medicare program, USA Today says 43 state legislatures are set to convene in January to address a liability of more than $1 trillion to provide medical care promised to some 25 million current and future retired state and local civil servants.

The newspaper quotes state Rep. Dale Folwell (R-NC) as saying, “The numbers make your jaw drop.”

North Carolina, for instance has reported a $23.8 billion unfunded liability for retiree healthcare, more than three times what the state owes in ordinary debt.

Meanwhile, at Goldman Sachs, the bank earned nearly as much per share in 2006 as it had in the last two record years combined, and paid out $16.5 billion in compensation this year, or roughly $623,418 per employee.

No retirement worries for these guys.

And if by chance one of these bankers had to live from paycheck to paycheck, like millions of Americans who live in dread of receiving pink slips, it would be a long time before the wolves started to howl at the doors of the boys on Wall Street.