Move the Market: Get a bigger bonus. Life at Bloomberg

Bloomberg L.P., London

Bloomberg L.P., London (Photo credit: Wikipedia)

Bloomberg gives reporters bonuses for market-moving stories. Bloomberg News apparently has a novel framework wherein they provide a number of their reporters with explicit bonuses if they publish stories that move the market. This is just one of several metrics that comprise how the annual bonuses of their reporters are computed.

The practice is not a common one throughout the finance news industry, and none of the journalists who worked in other news outlets did not seem to know that this policy was common practice at Bloomberg. We also looked in related fields such as public relations professionals, bankers, and traders, and none of these individuals appeared familiar with this practice.

The majority of individuals with whom we spoke, traders in particular, seemed shocked to learn that this practice was occurring at Bloomberg. In particular, they were worried that having such an incentive present would push Bloomberg reporters toward stretching or exaggerating stories with the precise intention of shifting the markets. Traders, after all, are trained to respond at an instant to news stories and their headlines, and they make decisions that frequently lead to the gains or losses of large sums of money.

We turned to Bloomberg to inquire about their policies. A spokesperson from the company said that it was true. He stated that information would not become news unless it was already true. However, at Bloomberg News, they found the news that was most important to be news that was actionable. In other words, they made an effort to be the first when it came to informing others of surprises in the markets that resulted in shifts in behaviors. They also stated they made it a priority to obtain reports that showed the largest changes in value throughout all kinds of assets.

Another former employee of Bloomberg News, who was only willing to share his information if his identity would be kept anonymous, confirmed that Bloomberg News did track the degree to which reporters’ stories moved the market, and that these stories were likely to play a role in the amount of bonus pay reporters received. Given the structure of compensation that is present at Bloomberg News, therefore, it is not a surprise to learn that the reporters there are highly focused on writing stories that move the market.

The confidant revealed that bonuses were given to anyone who proved capable of moving markets, and that these awards were given to teams. In addition, teams that did not move the market were almost shunned, as they would not receive full bonuses. Another former employee stated, however, that the concerns about the compensation practice at Bloomberg News had been overstated. He stated that the most important factor in determining the size of the reporters’ bonuses was the level of accuracy in the stories. Stories that had some errors or mistakes here and there were also going to be downranked slightly.

The former employee noted that the managers of the reporters were responsible for deciding the bonuses, and provided an example of how bonuses could be allotted for one reporter who covered a story on Wal-Mart vs. another who looked into a story on a company in Texas. He implied that it was not a direct application from market moving to bonus, and stated that people did not simply receive $5000 bonuses for writing market moving stories.

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One response to “Move the Market: Get a bigger bonus. Life at Bloomberg

  1. Pingback: Goldman Sachs is Creating its Own Instant Messaging Chat Room | Alpha Banker·

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