Greed at a Glance
A weekly update on avarice in America and beyond

November 27, 2006

If Goldman Sachs, the Wall Street financial giant, distributed all its compensation dollars equally among the company’s 25,647 workers, every employee in the firm would have received just about $500,000 so far this year. But compensation at Goldman Sachs — and the rest of Wall Street’s biggest firms — gets divided anything but equally, says a new federal report, and the resulting top-heavy income distribution is hurting average New Yorkers. In Manhattan, notes Bureau of Labor Statistics regional commissioner Michael Dolfman, “the middle class is being squeezed out of the city because of the tremendous purchasing power of the people in the global sectors of the economy.” The movers and shakers in that global sector, Wall Street ’s top 1,000 investment bankers, will average somewhere between $2 million and $3 million in bonuses this year, “more than 10 times their $100,000 to $250,000 salaries,” say reseachers from Johnson Associates . . .

New York’s Metropolitan Museum of Art has just opened a new exhibit that honors the “ultimate purveyor of luxury knickknacks,” Louis Tiffany, the first heir to the Tiffany & Co. fortune. A century ago, the grand parties at Tiffany’s 600-acre Long Island estate almost perfectly captured the over-the-top ethos of a plutocratic age. At one Tiffany soirée, in 1914, 150 “men of genius” supped while “a procession of young women in Grecian garb” paraded trays of stuffed peacocks, followed closely by a line of boys in chef hats bearing “platters of suckling pig.” Tiffany died in 1933, and his 84-room mansion burned down in 1957. Over the next few years, “a period that had little use for Tiffany’s brand of opulence,” notes arts analyst Ariella Budick, the burnt-out ruins just sat there. Today, by contrast, a single Tiffany lamp “can fetch hundreds of thousands of dollars,” a turn of events, observes Budick, that Louis Tiffany “would no doubt have hailed.”

Golf courses have become the latest battleground in the ongoing class war between China’s globalized super-rich and average Chinese working families. Earlier this fall, the president of Xiamen University announced plans to make golf a mandatory course for elite students in business programs — and build, on campus, a golf practice course. Golf, the president argues, can help top students “learn networking skills.” Critics say the golf money could be better spent helping poor students with tuition, up over six-fold since 1996. Almost all golf courses currently open in China operate as private clubs closed to the public. At the Shanghai Sheshan Golf Club, site of a just-held international pro golfers tournament, memberships cost 1.45 million yuan, or $181,250, the equivalent of 10 years salary for a Chinese software professional . . .

The world’s “private” banks — the exclusive financial institutions that cater to deep-pockets with at least $1 million ready to invest — are branching out. One Paris-based establishment eager to build an international clientele, Société Générale Private Banking, has created a wine fund that collects rare vintages, including some that run $1,280 a bottle, and has them stored at specialty shops around the world. About a dozen private banking giants, globally, are now competing for wealth management market share. Their target market — families with over $1 million in nonresidential assets —  make up a tiny fraction of the world’s population, less than a hundredth of 1 percent, but hold 28.6 percent of global wealth, $25.3 trillion in all. Enthuses Pierre Mathé, the top private banking exec at Société Générale: “The market is very buoyant. Everyone can have a piece of the cake.”

Just how many American CEOs had their stock options “backdated”? Analysts from Cornell, Harvard, and a French business school have revealed a new estimate, based on a statistical analysis of over 19,000 option grants from 1996 through 2005. Options give executives the right to buy their company’s shares of stock in the future, at the price in effect at the day of the option grant. The lower this “current” price, the more profitable the option figures to be. Some 850 CEOs, the new research finds, have had their options backdated to make the “current” price the lowest monthly price of their company’s shares. This manipulation stuffed, on average, an extra $1.3 million to $1.7 million into executive pockets, a sum, says study co-author Lucian Bebchuk, that's “not pocket change.”

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