Obama’s Executive Pay Cap…The Loopholes

Thursday, February 05, 2009
No Pay Cap for Ken Lewis

President Obama’s announcement of a $500,000-a-year pay cap for executives of firms receiving bailout funds seems an appropriate response to public outrage about Wall Street excesses. However, as so often happens when money meets politics, there are important loopholes. For example, the limits can be waived with shareholder approval, and executives can still receive stock awards that can be cashed in after the firms repay the government. But the biggest loophole is that it doesn’t apply to firms that have already received bailout money, such as Bank of America, Citigroup, AIG, JPMorgan Chase, Wells Fargo, General Motors and Chrysler. Citigroup’s CEO, Vikram Pandit, received a salary of $3.1 million in 2007 and added a $2.5 million bonus the following January. He also owns more than one million shares of Citigroup stock, worth about $3.8 million. Kenneth D. Lewis, Chairman, CEO and President of Bank of America, received a salary of $1.5 million in 2007 and bonuses of $4.2 million. He also owns $11 million worth of BofA stock.

Bailout Cap Won’t Affect These Three (by Derek Kravitz, Washington Post)


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