By Steve Geimann
Sept. 2 (Bloomberg) — Chief executive officers at 20 banks that 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.
Lenders including Bank of America Corp. and Wells Fargo & Co. paid CEOs an average of $13.8 million last year, topping the $10.1 million for S&P 500 leaders, according a report released today by the Institute for Policy Studies. 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.
“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.”
Compensation at U.S. financial companies is being scrutinized after Congress adopted a rescue plan and pumped $300 billion into the 20 troubled lenders. Leaders of England, France and Germany are urging a limit on banker bonuses. The Obama administration has named Kenneth Feinberg as a pay master for seven U.S. companies, including Citigroup Inc. and General Motors Corp. that got more than one bailout.
The Institute, whose Web site bills it as “Washington’s first progressive multi-issue ‘think tank,’” has released its “Executive Excess” report annually since 1993.
Executives may be “poised for spectacularly rapid recovery” as rising share prices for nine of 20 banks getting Troubled Asset Relief Program aid led to a $90 million gain in stock-option values, the report said. 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.
The institute said government efforts to rein in pay focus on companies that got aid from the Troubled Asset Relief Program, and said results may be modest as firms such as Goldman Sachs Group Inc. and JPMorgan repay aid to avoid pay limits.
“The federal government has, to this point, not moved forward into law or regulation any measure that would actually deflate the executive pay bubble that has expanded so hugely over the last three decades,” the study said.
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.
“The report’s central flaw is that it ignores the fact that congressional attempts to limit executive pay have typically backfired,” Timothy Bartl, senior vice president of the Center on Executive Compensation, said today in a statement. The Washington-based center was created by the HR Policy Association, representing corporate human resources executives.
German Chancellor Angela Merkel and French President Nicolas Sarkozy this week said they will urge Group of 20 leaders to regulate banker bonuses. U.K. Prime Minister Gordon Brown wants pay subject to clawback should performance suffer, the Financial Times reported, citing an interview.
To contact the reporters on this story: Steve Geimann in Washington at firstname.lastname@example.org.
Last Updated: September 2, 2009 11:07 EDT