CEO Pay At TARP Banks 37% Higher Than The Average Bear
Let me preface this with the normal arguments
(1) the skill set of American public CEOs is 1 in a 100 million; only a few humans on Earth can do this work and none of them live in Europe (ex UK), Australia, or Asia. That is why the CEOs running large companies in those countries make a fraction of American (and some financial type British) CEOs. Only Americans have the skill set so hence must be paid.
(2) the skill set of these people have expanded greatly in the past few decades. When CEOs only made 70x what the average American in the 1970s that showed CEOs were not pulling their weight in that era. Now that it is over 400:1 it shows they have really gotten that much better than the lackeys who used to run corporate America 30+ years ago. Let us applaud this adjustment.
(3) It's a free market; as in a small group of board directors compete with other small groups of board directors in ever upward compensation that has little to do with performance and a lot to do with rubbing backs. After all many board members are former politicians and/or executives at other companies. That's how a free market works - duh.
(4) CEOs in private companies are likewise weak and frankly close to incompetent; hence paid appropriate to their inability to feed at public troughs... err, to land jobs at US public corporations. By being paid similar to public European CEOs, the private American CEOs are shown what they truly are: socialists who only feed on the state.
(5) You can't just look at 1 year; maybe compensation was lower (chuckle) last year or will be (cackle) next year. Taking any 1 year of compensation alone is clearly taking data out of context. (dogma)
(6) CEOs are not motivated by things normal mortals are - like pride, putting food on the table, or providing a roof over their head. Without these pay packages you will simply have completely unmotivated folk in $5000 suits who are not productive. We can't have that.
(7) What would you have us do? Turn into the Europeans (ex British) and become (gasp) socialist by setting pay at some ratio like 7 to 1, 10 to 1, 50 to 1 versus the common peasant worker? That's unAmerican - we don't do socialism*.
*Unless you count corporate socialism where the peasants give their money to bail out corporations or provide subsidies. Then it's acceptable and no longer called socialism, I believe the term then is "capitalism".
(8) If you don't pay these people, they will take their skills and MOVE! To somewhere like the UK! (at least if they are in the banking field) And if they are not paid in the UK they will MOVE! To ... (crickets chirping) ... well they will find a place. (is Croatia hiring? UAE? Antarctica?) So don't you dare stop paying them, or they... will.... move. Don't ask any questions over and above that. Just be scared of the thought and empty your wallet into the receptacle.
(9) If you are unhappy or (as the blog writer apparently is) unAmerican (codeword for European) and can only resort to class warfare, you can walk with your feet. When you sell your 300 shares, the CEOs will notice and only THEN can we change behavior. Try it right now - sell your 300 shares of company XYZ in your Ameritrade account. I assume the CEO will be in fetal position within minutes begging corporate directors to rescind the handouts... err, payouts.
Anyhow, CEO compensation is a great topic but I try not to beat a dead horse because it will never change in our brainwashed society. The American idols (Fed heads, public CEOs) are now part of the celebrity culture. However at times, a story pops up that requires a mention and we will put on our populist cape and blog about it (always puts an end to injustice!)
Maybe when the ratio of pay hits 5000:1 (public CEO: US peon worker) while countless remain unemployed or relying on public assistance to survive, someone might scratch their head and review their dogma, but for now 430:1 seems just fine. (thanks for asking) It's all become ludicrous and completely detached with performance but now we see those banks who received socialism* (the American kind - corporate) are doing even better (37%) than the average CEO. Because their skill set (unique, 1 in 100 million) delivered them into the hands of the US taxpayer... and that requires extra compensation. Heads they win, tails they still win - American style. [Sep 27, 2008: Heads We Win, Tails We Win]
Reverse Robin Hood - long & strong.
- Chief executive officers at 20
banksthat got U.S. aid received compensation 37 percent higher than the average for leaders at Standard & Poor’s 500 companies and may be poised for gains as stock values rise, a study showed.
- Average CEO pay was 430 times larger than for typical workers, and at nine of 20 banks the value of stock options soared $90 million in a year, the Washington-based group said, citing proxy statements. (nice! let me guess these were granted because the old stock options, which were supposed to be enrich CEOs only if the stock performed, did not work out. Hence in return for non performance a batch of newly issued, lower priced options must of been granted. Otherwise, the CEOs would ....move)
- JPMorgan Chase & Co. led with a $20.6 million gain for five executives, followed by $17.9 million each for American Express Co. and PNC Financial Services Group Inc., the study showed, based on calculations using proxy statements.
- The top five executives at the 20 banks had a three-year pay total of $3.2 billion, with $1.2 billion in 2006 and 2007, and $800 million last year, the study showed, citing corporate proxy statements.
But it is ok, that's what the "free market" will bear and you dear reader should see the offset being borne in your higher bank fees. [May 29, 2009: USA Today - Banks Find Ways to Boost Fees] Thank you for your service to your oligarchy.
Reform? Ah, memories. As we do every crisis a lot of clucking happened when people were mad - but we have short memories. Just keep these "15 proposals" in storage - during the next crisis it will save time... we won't have to redraft them. We can just dust the same 15 off, wave them in the air during CSPAN coverage while winking to the lobbyist seated in the back of the chamber, and once the peasants are calmed (heavy does of NFL, American Idol, Jon and Kate Plus Eight), put the proposals back into storage. Rinse. Wash. Repeat on 5-7 year cycles.
- The institute’s report showed 15 proposals for direct pay restrictions, revisions to tax policy for deducting compensation, setting governance standards or requiring disclosure that have failed to be enacted into law.
It was an excellent article until they uncovered a "socialist" to provide these outrageous quotes... a shame a great story about free market capitalism* had to be marred by what I can only assume is a European based writer. (what type of American would try to throw in quotes like this?)
- “We need to look at the overall level of pay,” Sarah Anderson, report author, said in a Bloomberg Television interview. “As long as people can continue to be able to make tens of million of dollars in bonuses it is going to encourage outrageous behavior that can endanger our whole economy.”
- German Chancellor Angela Merkel and French President Nicolas Sarkozy this week said they will urge Group of 20 leaders to regulate banker bonuses.
And we don't ever want to see something like that happen in our country.