As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Wednesday, April 15, 2009

Your Free Market At Work

2008 was a mixed year for corporate America. On the one hand, everybody lost money and almost crashed the global economy. On the other hand, some CEOs got PAAAAAID!!

More U.S. chief executives got pay raises than had their pay cut in 2008, a year when billions in taxpayer dollars went to prop up struggling companies and millions of workers lost jobs, according to an AFL-CIO survey released on Tuesday [...]

The executive pay study of major companies by the AFL-CIO, the country's largest labor federation, calculated compensation that included stock options granted to CEOs but not yet vested.

Some governance experts favor this method, which is intended to take into account the intent of corporate boards.

Using that methodology, Citigroup Inc CEO Vikram Pandit made $38 million in 2008, compared with the roughly $11 million reported in the company's compensation section in U.S. Securities and Exchange Commission filings.

Citigroup collected $45 billion in government bailout funds in 2008.

"When it comes to CEO pay, many companies continue to hew to the fiction of pay for performance," said Daniel Pedrotty, director of the AFL-CIO's Office of Investment.

I like how the article characterizes the AFL-CIO's methodology as if it's novel. They calculated CEO compensation based on their total compensation. What's the mystery here?

As I said before, ultimately CEO compensation is hard to stop with caps or bonus limits because money, like water, can flow around a rock. Adding marginal tax brackets and significantly taxing the highest ends of total compensation would have a greater impact. But the big story here is the complete disconnect between pay and performance. Wall Street talks sweetly about capitalism as long as they don't have to play by its rules.

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