Paying Bonuses

Bank of America just took money from me and, in return, they tried to harm my business.

I wil explain. First, a little background. Our company, K2awards, is an internet company that sells trophies, all kinds of them. Soccer trophies, basketball trophies, bocce trophies, you name it. You would not think it would be affected by the recession. The entire industry has been affected and business across the board is down. Suppliers are complaining and begging retailers for business. The causes are myriad. Companies are cutting back in general. Fewer employees mean fewer employees getting awards. Youth leagues are struggling to get participants as parents wonder if they need to pony up another $100 in fees and $50 for uniforms and equipment (even more for equipment for some sports.)

As a result of all this, we had a soft fourth quarter and I did not pay our employees any bonuses. This is the first time ever and I was not happy about it. I did, however, have the opportunity to pay part of the $4 billion in bonuses to Merrill Lynch employees. While this was not a direct payment, it was pretty close as a result of the $40 billion government bailout of BankAmerica. I pay taxes. Fortunately, lots of taxes. And who funded the bailouts, yes that was us. And where did that money go? To highly paid executives who performed so poorly that they had to be bailed out by Bank of America and the government. John Thain, the ex-CEO of Merrill had the feeble excuse that these failed executives needed the bonus for retention so they could help salvage the franchise that they had destroyed. Where are they going to go? What financial firm is hiring.

Now the real kicker. I funded the Bank of America bailout - not just me - all of us taxpayers, but I did far more than my percapita share. The rationale for the bailout was to ensure that the banks had money to lend to businesses. And what happened? Bank of America reduced my line of credit. In other words, I paid Bank of America bail out money, so they could lend me less. THe most perverse thing is as that my portion of the bailout money is about equal to the my line of credit with Bank of America. Is this how we are going to stimulate the economy? I do not think so. Fortunately, we are very conservatively capitalized and we do not need the money. If I did need the money, 30 more people would lose their jobs. With that said, we just hired a new employee and I would like to hire more. But there is a real question as to the sanity of that when my tax dollars are being taken and given to companies that are making business tougher for me. It may be a bad idea for me to invest.

In my last post, I mentioned the measures we are taking as a company to reignite the business. We are moving faster and more aggressively. The results are looking very promising with orders rising well above prior year.

This has been more of a rant than a blog. But I had too.