According to a recent study by the _""Associated Press"":http://www.associatedpress.com_, banks that are now receiving bailout money from taxpayers, awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year.
The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue, _AP _said. Some trimmed their executive compensation due to lagging bank performance, but still forked over multi-million-dollar executive pay packages, _AP _reported.
Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships, and professional money management, the _AP _review found.
According to the _AP_, the total amount in benefits given to nearly 600 bank executives would cover bailout costs for many of the 116 financial institutions that have so far accepted tax dollars to boost their bottom lines. In total, the 116 banks have so far received $188 billion in taxpayer help, _AP _said.
""Rep. Barney Frank"":http://www.house.gov/frank/ (D-Massachusetts), chairman of the House Financial Services committee, told the _AP _that the bonuses tallied in its study amount to a bribe ""to get them to do the jobs for which they are well paid in the first place.
""Most of us sign on to do jobs and we do them best we can,"" said Frank. ""We're told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!""
The _AP _compiled total compensation based on the banks' annual reports filed with the ""Securities and Exchange Commission"":http://www.sec.gov (SEC). _AP _reported the following key findings:
- The average pay to each of the 116 banks' top executives was $2.6 million, including salary, bonuses, and benefits.
- Lloyd Blankfein, president and CEO of ""Goldman Sachs"":http://www2.goldmansachs.com/, received nearly $54 million in compensation last year. The company's top five executives received a total of $242 million.
This year, Goldman will forgo cash and stock bonuses for its seven top-paid executives, _AP _reported. They will work for their base salaries of $600,000, Goldman has said. According to _AP_, the company described its pay plan last spring as essential to retain and motivate executives ""whose efforts and judgments are vital to our continued success, by setting their compensation at appropriate and competitive levels."" A Goldman spokesman declined to comment to _AP _reporters beyond that written statement. On December 16, the New York-based Goldman reported its first quarterly loss (of $21 billion) since it went public in 1999. It received $10 billion of taxpayer funding on October 28.
- Even where banks cut back on pay, some executives were left with seven- or eight-figure compensation. Richard D. Fairbank, the chairman of ""Capital One Financial Corp."":http://www.capitalone.com/, took a $1 million hit in compensation after his company failed to live up to performance expectations last year, but he still got $17 million in stock options. His company received $3.56 billion in bailout money on November 14.
- John A. Thain, CEO of ""Merrill Lynch"":http://www.ml.com/, led all corporate bank compensation packages with $83 million in earnings last year. Thain, a former CEO for Goldman Sachs, took the company's head post in December 2007, avoiding the blame for Merrill's annual loss of $7.8 billion. Starting so late in the year, he earned $57,692 in salary, a $15 million signing bonus, and an additional $68 million in stock options. Like Goldman, Merrill received $10 billion from taxpayers on October 28.
The bailout's Troubled Asset Relief Program (TARP) set limitations on some compensation packages for participating banks, such as prohibiting golden parachutes for departing executives, but it did not limit salaries and bonuses unless they are seen as encouraging excessive risk to the institution, the _AP _said. To view the Treasury Department's guidelines for executive compensation under the bailout's Emergency Economic Stabilization Act of 2008, ""click here"":http://www.treas.gov/initiatives/eesa/executivecompensation.shtml.