CEO’s Pocket Big Pay While Their Companies Tank

[Omaha Steve]

http://blog.aflcio.org/2008/03/07/ceos-pocket-big-pay-while-their-companies-tank/

by Mike Hall, Mar 7, 2008

Three CEOs—Angelo Mozilo of Countrywide Financial Corp., E. Stanley O’Neal of Merrill Lynch and Charles Prince of Citigroup—presided over companies that lost a combined $20 billion in just the past two quarters of 2007 as a result of investments in subprime and other risky mortgages.

http://www.youtube.com/watch?v=vMIXssogVWY

For that kind of performance, the CEO trio pocketed more than $320 million in compensation, stock bonuses and other rewards last year. That disconnect between performance and pay, says Rep. Henry Waxman (D-Calif.), shows that

there seems to be two different economic realties in this country. Most Americans live in a world where economic security is precarious and there are real economic consequences for failure. But our nation’s top executives seem to live by a different set of rules.…CEOs seem to hit the lottery when companies collapse.

Waxman made his remarks at his U.S. House Oversight and Government Reform Committee’s hearing this morning on CEO pay and the mortgage crisis.

Today’s hearing on executive pay versus performance follows the committee’s December examination of the roles and conflicts of corporate compensation consultants in setting executive pay. (Click here to read the December 2007 AFL-CIO’s testimony; here for other testimony from the December hearing and here for more information from the AFL-CIO’s Executive PayWatch.)

Waxman says all three companies “bet heavily on the subprime market” and suffered enormous losses. Countrywide lost $1.6 billion in 2007 and its stock lost 80 percent of its value. Merrill Lynch lost $10 billion and its stock lost 45 percent of its value. Citigroup also lost $10 billion and its stock lost 48 percent of its value.

FULL story at link.

[leftofthedial]

1. these bastards are thieves

they are criminals.

we should institute a maximum income cap in this country that is indexed to the minimum wage.

[TahitiNut]

2. I'm not in favor of a legislated maximum, but I favor an income tax system ...

... that treats ALL "executive compensation" of a corporation as an after-tax expense (i.e. non-deductible for corporate income tax purposes) and income tax rates that STOP favoring unearned income. The income tax rates for unearned income (i.e. capital gains, dividends, and interest) should be FAR MORE progressive, compared both to current rates and rates applied to earned income. When unearned income exceeds an amount greater than what 95% of working people EARN and gets taxed at HALF the rate, it's an abomination. Capital gains should be indexed by inflation and then taxed, at the higher end, as a "windfall profit."

What most appalling is the fact that corporations are DOUBLY favored in the income tax rate structures. First, they are allowed to deduct EVERY expense from revenues to arrive at a 'net taxable income' - and some expenses even generate CREDITS against taxation - while individuals are afforded nothing close to such a deductibility for even basic living (and commuting) expenses. On top of that, corporations also benefit from the privileged treatment of dividends, interest and capital gains. That's appalling.

When unearned income is PRIVILEGED by law, we're nothing but a society that oppresses the working class for the benefit of the ownership class. That's appalling.

[leftofthedial]

3. a society that oppresses the working class for the benefit of the ownership class

welcome to America!

I think a couple of generations of taxing all income that is more than some multiple of the minimum wage--say 40X--at 100% would do wonders for this country.