October, 22 2009, 01:56pm EDT
For Immediate Release
Contact:
Kristi Ceccarossi, communications coordinator, (617) 983-4094; (413) 210-1803 (m); kristi@ips-dc.org
Reports of Pay Czar's 'Heavy Hammer' on Wall Street Exaggerated, Says Independent CEO Pay Watchdog Group
WASHINGTON
Reports of Pay Czar Kenneth Feinberg's "heavy hammer" on Wall Street are exaggerated, say executive pay analysts at the Institute for Policy Studies.
Leaked reports on "Pay Czar" Kenneth Feinberg's long-awaited executive
pay rules have left the impression of an iron-fisted crackdown on Wall
Street compensation, but Sarah Anderson, the lead author of America's Bailout Barons, is urging for a closer analysis of Feinberg's guidelines.
1. Reports of a 50 percent cut in overall compensation
This figure appears to be skewed by a few special cases.
The $100 million bonus to a Citigroup trader was eliminated from the
pool after his division was spun off and sold earlier this fall to
Occidental Petroleum. Likewise, Bank of America CEO Ken Lewis agreed to
forego salary and bonuses for 2009, but will get to pocket nearly $70
million in retirement benefits at the end of the year.
2. Reports of cash salary cuts
Reports also indicate that Feinberg will issue a 90 percent cut in cash salary, but this will be offset by as yet undisclosed amounts of "salary stock" and long-term incentive compensation.
3. AIG crackdown
AIG is expected to face the tightest restrictions on pay, but CEO Robert Benmosche will still receive a $7 million annual salary
and as much as $3.5 million in incentive awards. Feinberg has still not
succeeded in getting the company to agree to not give bonuses to
employees in the Financial Products division.
Available for interview requests
SARAH ANDERSON, who has spent the last 16 years analyzing CEO pay at the Institute for Policy Studies,
said today: "Mr. Feinberg had a narrow mandate, but he still could have
played hardball. He could have told these firms they wouldn't get
another taxpayer dime unless they renegotiated their executive pay
pacts."
CHUCK COLLINS, senior scholar at the Institute for Policy Studies, co-founder of Wealth for the Common Good and co-author of America's Bailout Barons,
said: "Feinberg has been spending his time trying to reach a
'consensus' on CEO pay with the firms that crashed our economy. He
ought to be speaking to the average Americans our economy has crashed
down upon."
SAM PIZZIGATI, associate fellow at the Institute for Policy Studies, author of the online newsletter Too Much and co-author of America's Bailout Barons,
said: "Feinberg's preferred 'solution' to our executive pay problems,
substituting stock for cash in executive pay packages, would have done
little to prevent the subprime carnage if put in place 10 years ago."
MIKE LAPHAM, project director of Responsible Wealth
at United for a Fair Economy, said: "The financial collapse and the
government's response make it clear that the financial service sector
is not just playing risky casino games with their own money - they're
playing with everyone's money. When they bet the house and lose, we all
lose. Extreme pay and short-term reward structures lead to risky
behaviors. We need much stronger regulation and oversight of executive
compensation."
For more information, visit www.ips-dc.org/globaleconomy
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.
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