Bailout Bonanza for Top Execs
As Radley Balko notes below, financial institutions that have received some $188 billion in the federal bailout have kicked $1.6 billion to their top 600 employees this last year.[*] Some details, via the AP:
Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, country club memberships and professional money management.
The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines….
The average paid to each of the banks' top executives was $2.6 million in salary, bonuses and benefits.
Lloyd Blankfein, president and chief executive officer of Goldman Sachs, took home nearly $54 million in compensation last year. The company's top five executives received a total of $242 million. This year, Goldman will forgo cash and stock bonuses for its seven top-paid executives. The New York-based company on Dec. 16 reported its first quarterly loss since it went public in 1999. It received $10 billion in taxpayer money Oct. 28.
John A. Thain, chief executive officer of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, took the reins of the company in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he earned $57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options. Like Goldman, Merrill got $10 billion from taxpayers Oct. 28….
The program set restrictions on some executive compensation for participating banks, but did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution.
My immediate responses to this are a) Of course the bailout's limits on executive compensation wouldn't work, and b) this is all an outrage, and c) why should any of us care what anybody anywhere is making?
The second-beat answer to c) is one of the reasons to be against this or any other bailout: When you shovel tax money, public money, at something, its inner workings do legitimately become the public's business. Certainly this is the case with public schools or civil service employees, where compensation is a public matter. And now it is on Wall Street and various other parts of the economy too. I recognize that any industry has to set its compensation scales, especially of those at the top, to be competitive in ways that outsiders won't always understand. I also think the owners of a company, whether privately or publicly held, should be answerable only to the business's owners (and employees). But here's one more way the bailout muddies everything.
[*] Correction: As several commenters have pointed out, I originally and inaccurately wrote that the compensation packages were for 2008 when in fact they were doled out last year, in 2007. Apologies for my confusion.