Public funds support many bailed-out companies. So why are we still paying CEOs outrageous salaries?
Without taxpayer support, the President of the United States would have no paycheck. Without taxpayer support, the CEOs of many of Americaâ€™s biggest financial firms would now have no companies.
Both President Barack Obama and high-finance CEOs, in other words, rely on taxpayers. Yet the compensation of taxpayer-reliant financial industry CEOs dwarfs the White House paycheck. In 2008, the 20 financial chief executives whose firms have received the most bailout money received average pay packages worth 34 times the presidentâ€™s $400,000 annual salary.
Earlier this year, for a brief period, that contrast struck many members of Congress as extraordinarily odd. Firms relying on government assistance, these members believed, should not pay their executives more than the head of our government.
In February, the Senate approved a bill that included a $400,000 cap on all compensation for employees of bailed-out firms. But since the House version of the bill did not include that cap, it never made it into the final legislation.
Much more modest executive pay restrictions placed on bailout companies apply only to a small number of executives at these firms. Even then, they do precious little to rein in pay at the top of the corporate ladder.
In effect, the CEO pay bubble on Wall Street remains un-popped -- nearly a year after last Septemberâ€™s financial meltdown.
In the â€œpre-bubbleâ€ days of the 1980s, top corporate executives seldom earned much more than 30 to 40 times the pay of average American workers. In 2008, amid an economic collapse that rivaled the early days of the Great Depression, top executives averaged 319 times more than average American workers.
The architects of the countryâ€™s collapse, Americaâ€™s top 20 financial industry executives, took home even more than that. They averaged compensation that outpaced typical American worker pay by 436 times.
CEO pay clearly remains completely disconnected from any real underlying value that executives may offer.
President Obama, early in his term, committed to fixing an executive pay system that in his words had "contributed to a reckless culture and quarter-by-quarter mentality that in turn have wrought havoc in our financial system."
This article was distributed by Minuteman Media
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies. She is a co-author of the recently released report "Executive Excess 2009: America's Bailout Barons."