For Immediate Release

Organization Profile: 

Sarah Anderson, tel: 202 234 9382 x 227, email:

Media Availability on New Bailout Pay Rules

Expert analysts welcome Obama restrictions as sign of progress, but say tougher limits are needed to stop bailout profiteering

WASHINGTON - Compensation experts with the
Institute for Policy Studies (IPS) today called President Barack
$500,000 cap on executive pay at some bailed-out companies a "small,
very welcome first step toward ending excessive executive compensation."

"After 30 years of escalating CEO pay, we finally have a president who
taken a concrete step toward limiting the dollars that are cascading
executive suites," notes Sarah
, lead author of Executive Excess, the
Institute's yearly
report that tracks the gap between CEO and worker pay. "But given the
level of
public outrage over the Wall Street bonus bonanza, the administration
have gone much further to stop bailout profiteering." 

The key shortcoming of the administration plan is that the $500,000 pay
will apply
to only a
handful of firms getting "exceptional assistance." In recent news
administration sources have argued that
banks would choose not to accept government assistance if broader pay
restrictions were imposed, for fear of losing key personnel.

But as IPS Senior Scholar Chuck
points out, "The argument that super-sized paychecks are
to retain top talent doesn't hold water. It's that mentality that got
us into
this mess, as outrageous rewards encouraged outrageous behavior. Part
of the
solution to the crisis needs to be a new approach to compensation that
responsible business leadership." 

"By arguing that companies wouldn't accept government assistance if
they had to
rein in executive pay, the administration is suggesting that the vast
of companies getting bailouts don't really need the money," adds Collins. "That's not a winning argument
with taxpayers."

President Obama, in his remarks today, pledged to end the executive pay
"culture of narrow self-interest and short-term gain at the expense of
everybody else." But the pay curbs the President announced today, says
associate fellow Sam Pizzigati, only
begin the cultural change that's necessary to fix the failing U.S.

"So long as we tolerate these outrageous rewards, that outrageous
behavior -
the endless mergers that create workplace chaos, the downsizings and
outsourcings, the hammering of consumers with hidden fees - will

The Institute's pay experts favor a uniform cap for executive
pay that
would apply to all firms receiving bailout funds and all forms of
Sen. Claire McCaskill (D-Missouri) and
several other
senators are behind a proposal to cap executive pay in bailed-out firms
at no
more than $400,000 - the salary of the President of the United States.
McCaskill has introduced the bill
as an amendment to the stimulus legislation.

Click here
for a more
analysis of the McCaskill bill and the executive pay provisions in the
reform bill recently approved by the House.

announced that these guidelines "are only the beginning of a long-term
and that they are "going to be taking a look at broader reforms."


Something is Happening. People are Drawing Lines.
And We’ve Got It Covered.

But we can't do it without you. Please support our Winter Campaign.

In addition to stronger restrictions on bailout recipient pay, IPS
urging the Obama administration to support two specific steps that
could end
taxpayer subsidies for excessive executive compensation.

"The administration should ask Congress to deny all corporations tax
deductions on any executive pay that runs over 25 times the pay of a
lowest-paid worker," says Anderson.

A generation ago, she notes, pay for most CEOs fell within a 25-to1
range. In
2007, top CEOs averaged 344 times average worker pay.The Obama
the Institute's experts propose, should make this same 25-to-1 pay
standard the
benchmark for any company that seeks a government procurement contract
or tax

"No company that's getting our tax dollars should be paying its
over 25 times what workers are receiving," says Pizzigati,


Sarah Anderson is the Director of the
Economy Project at the Institute for Policy Studies and a co-author of
15 IPS
annual reports on executive compensation. Her views on this issue have
recently in The Washington Post,
The New York Times,
and on Neil Cavuto's "Our World" on Fox News. Contact:,
tel:  202 234 9382 x 227.


is an Associate Fellow of the Institute for Policy Studies.
He recently commented on executive pay for "Geraldo at
Large" on Fox
News and "The Agenda with Steve Paikin"
Charlie Rose).
301 933 2710.

Chuck Collins
is a senior scholar at the Institute for Policy Studies where he
directs the
Program on Inequality and the Common Good. He has written extensively
executive pay and last year was the lead author of High
, a
on corporate jets. Contact:,
617 308 4433.


This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do.

Institute for Policy Studies turns Ideas into Action for Peace, Justice and the Environment. We strengthen social movements with independent research, visionary thinking, and links to the grassroots, scholars and elected officials. I.F. Stone once called IPS "the think tank for the rest of us." Since 1963, we have empowered people to build healthy and democratic societies in communities, the US, and the world. Click here to learn more, or read the latest below.

Share This Article

More in: