Dec. 14, 2009
CEOs Who Steered Economy Off a Cliff Received $28.9 Million Average Annual Salary, New Public Citizen Report Shows
Public Citizen Calls for Reforms; More Than 20 Protests to Be Held Around Country
WASHINGTON, D.C. - The CEOs of 10 Wall Street firms that either failed or received taxpayer bailouts were paid an average of $28.9 million per year in the years leading up to the Wall Street meltdown, according to a Public Citizen report released today. Their average pay this decade, calculated through 2007, equaled 575 times the median American family’s 2007 income.
“Fat cat compensation has nothing to do with good corporate performance,” Public Citizen President Robert Weissman said. “These CEOs were exorbitantly compensated for driving their companies off the cliff. At a minimum, Congress must ensure that corporate leaders are paid for long-term performance, not short-term illusions.”
The 10 companies highlighted in the report are American International Group, Bank of America, Bear Stearns, Citigroup, Countrywide Financial Corp., Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and Washington Mutual. The report recounts that former Countrywide CEO Angelo R. Mozilo was paid $244.8 million in the two years leading up to his firm’s demise; former Lehman Brothers CEO Richard Fuld received $246.3 million in the three years preceding his firm’s bankruptcy; and former Merrill Lynch CEO Stanley O’Neal received a $161.5 million golden parachute when he was removed in 2007. The next year, Merrill Lynch was sold for a fire sale price.
Public Citizen proposes three steps to address the recent Wall Street crisis and forge a direct link between compensation and long-term outcomes:
● The CEOs who headed companies that failed or received bailouts should pay back any compensation above the salary of the president of the United States for five years leading up to their company’s collapse;
● Congress should mandate that all annual compensation above $2 million for employees of publicly traded companies be set aside for seven years before they receive it, to ensure that they work to create long-term value, not short-term profit; and
● All compensation for the executives and top-paid employees of publicly traded firms should be approved by votes of long-term shareholders.
Public Citizen also has called for a windfall bonus and profits tax to be imposed on Wall Street.
Public Citizen’s report is being released in conjunction with a series of protests organized by members of the Americans for Financial Reform coalition against the enormous bonuses that Wall Street firms plan to lavish on their employees in 2009, just one year after the firms were rescued by taxpayers.
This week, Public Citizen will join its partners in the Americans for Financial Reform coalition at demonstrations at banks in more than 20 cities across the country. Protesters will demand that Wall Street and big banks use their anticipated $150 billion compensation and bonus pool to help American families recover. Some protesters will be singing “carols,” such as “Fleeced and Robbed” (to the tune of Feliz Navidad) and “Deck Their Halls.” In Austin, Texas, the “It’s a Wonderful Life” characters Mr. Potter and George Bailey will face off.
READ the report.
LEARN more about the demonstrations.