Tags: CEO | pay | highest-paid | bailouts

Report: Many of the Highest-Paid CEOs Were 'Bailed Out, Booted or Busted'

Friday, 30 Aug 2013 08:06 AM

By Michael Kling

Nearly 40 percent of the highest-paid CEOs in one or more of the past 20 years led companies that were eventually "bailed out, booted or busted," a new report from the left-leaning Institute for Policy Studies finds.

The best-paid CEOs are supposed to be the top performers in corporate America, but the left-leaning Institute for Policy Studies says its analysis reveals the "widespread poor performance" of the highest-paid CEOs.

For instance, Lehman Brothers CEO Richard Fuld received one of the largest paychecks for eight consecutive years. Then his bank crashed in 2008 in the largest bankruptcy in U.S. history and precipitated the financial crisis.

Editor’s Note:
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The think tank analyzed the 25 highest paid CEOs reported in the annual Wall Street Journal pay surveys over 20 years and reviewed how their firms fared over the years.

Overall, 22 percent of the CEOs on the highest-paid list led firms that went out of business or received taxpayer bailouts. Another 8 percent of the CEOs lost their jobs involuntarily, but that didn't stop them from leaving with golden parachutes valued at $48 million on average.

Further, 8 percent of the CEOs on the list led corporations that paid significant fraud-related fines or settlements. One CEO had to pay a penalty out of his own pocket for stock option back-dating. The other companies shelled out payments of more than $100 million per firm.

The think tank urges regulators to implement Dodd-Frank regulations about pay, including requiring corporations to disclose CEO-worker pay ratios and restricting compensation that encourages inappropriate risks.

Congress should also limit the tax deductibility of executive compensation, it argues.

Three CEOs received over $1 billion in inflation-adjusted pay over 20 years. Larry Ellison of Oracle, with $1.8 billion, Sanford Weill of Travelers and Citigroup, with $1.5 billion, and Michael Eisner of Disney, with $1.4 billion.

"The pay gap between large company chief executives and average American workers has grown from 195-to-1 in 1993 to 354-to-1 in 2012," the report states. "And these CEO figures don’t even include the compensation numbers for private investment fund managers, pay totals that now routinely soar into the nine-digit stratosphere."

Wells Fargo spokesman Michael McCoy told The Huffington Post that the firm's pay packages are needed to retain the best talent. Wells Fargo received $25 billion in bailout funds and had six CEO appearances on the top 25 highest-paid list.

"We take a disciplined approach for determining compensation based on four principles: pay for performance, promote a culture of risk management that avoids unnecessary or excessive risk taking, attract and retain highly qualified executives with competitive pay, and align executives' interests with those of stockholders," McCoy told The Post.

Editor’s Note: Will This Video Get Obama Fired? See the Evidence.

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