fatvegan

I wonder if Macquarie Bank's strategy of paying stupid amounts of money to its managers actually isn't that stupid. They could probably get those same people to work there for a lot less. They wouldn't be worth as much in another company, because they wouldn't be supported by all those brilliant Macquarie brains. But if they paid those managers less, maybe they'd have more trouble keeping the rest of the brains. The line of people queuing to get a job at Macquarie includes pretty much every good finance brain studying at my university. Just having that queue there is enormously valuable to Macquarie.

People aren't always that rational and think they stand a chance at getting that $33 million a year. A $5 million income is almost as good as a $33 million income, but it doesn't sound as good and it won't get you on the front page of the newspaper. So Alan Moss' income attracts a lot more talent than just Alan Moss. It makes smart people want to be in the vicinity of Alan Moss. If people thought about it, they'd probably work out that $33 million isn't that good, relative to the likelihood that they will ever become the CEO of Macquarie, and weighed against the pain and suffering of the next 30 years working at Macquarie (followed by even more pain and suffering being another Alan Moss). Especially since $33 million a year isn't so much better than a whole bunch less. You can probably thrown job satisfaction into that trade-off, but I reckon that if job satisfaction was really super high at Macquarie they'd be paying people a whole lot less.