Rationale Behind Wall Street Bonuses Can Get Lost in Translation

Welcome to my first mailbag. I've shortened and edited most of these questions for clarity, and I'm identifying the authors by initials or the screen names they used.

Got a question or comment about one of my articles -- or anything at all? You can post your questions or comments to http://talkback.blogs.fortune.cnn.com/ask-allan and I'll try to address them in my next mailbag.

Okay, here we go:

You totally miss the point in your column about bonuses. The AIG bonuses went to managers who failed miserably in their primary task: to make money for investors. Further, it appears that these folks manipulated the system to get their bonuses out of some sense of entitlement. All of this reeks not only of greed, but of arrogance.

-- Jim, King City, Calif.

This is typical of a ton of e-mails I've gotten. To use my own cliché, let me explain. I'm not outraged by the bonuses at American International Group because many, if not all, of them went to people who had nothing to do with AIG's collapse. I'd love to see some of the AIG biggies who ruined the company but left rich, laden with bonus money, suffer some public disgrace. It infuriates me to see people letting those biggies slide, but picking on AIG worker bees who are trying to get enough nectar to live on. Now, I'll share two things that we kick around at Fortune but don't generally mention in the real world outside of Manhattan.

First, living in Manhattan is hideously expensive (which is why I live in the suburbs). So $250,000 a year, which is "rich" in most of the country, doesn't get you much in high-tax Manhattan, especially if you're strapped with a huge mortgage or rent payment and have a couple of kids in private school at $30,000 or so each. (That's after-tax if you're wondering.) Second, "bonus" has a different meaning in New York than in the normal world. To normal people, "bonus" is an extraordinary payment for a job done exceptionally well. But on Wall Street, salaries are so (relatively) low that part of your "bonus" is really base pay. This linguistic disconnect is a major irritant to both parties in the Wall Street-Main Street divide.