NEW YORK Hundreds of millions of dollars walked out of Bear Stearns Cos. Park Avenue headquarters last week in the form of bonus checks.
While most Wall Street firms pay bonuses the same way they pay ordinary salaries via direct deposit Bear Stearns still hands out paper checks. Because as much as 75% of an investment banker or traders compensation comes from bonuses, that means really big checks.
The custom dates back to simpler times, when managers personally handed out pay for a years work well done. It also let some employees keep their spouses in the dark about pay. Regardless, for a lucky few it makes for a memorable day.
It was the most pleasant trip to the bank you can ever imagine, said Chuck Ramsey, a former general partner at Bear Stearns and co-head of mortgage securities. It felt wonderful I wouldnt have had it any other way. I hope they never change.
Mr. Ramsey, who left Bear Stearns in 1994 and is now chief executive of Mortgage Risk Assessment Corp., said his tradition called for stopping for a couple of beers on the way to the bank to savor the experience.
Youre laughing the whole way, he said. Theres a great sense of satisfaction the day you get rewarded for the whole years work.
Senior managing directors generally earn at least seven figures a year at Bear Stearns, though only $200,000 comes in paychecks. For example, chief executive officer James Cayne made $200,000 in salary last year and received a bonus of $10.8 million, according to filings with the Securities and Exchange Commission.
The bonus check is one of the many quirks that makes Bear Stearns unique, such as chairman Ace Greenbergs annual Christmas magic show. This is just another one of Ace Greenbergs ways of keeping up traditions, said Richard Lipstein, managing director at Gilbert Tweed Associates Inc.
Rivals Merrill Lynch & Co., Lehman Brothers Holdings Inc., Goldman Sachs Group Inc., and Morgan Stanley Dean Witter & Co. wire their employees money into bank accounts, unless an employee does not have direct deposit set up, spokespeople at those firms confirmed.