If CEOs Take Our Money, We Can Limit Their Pay

by Tula Connell, Feb 5, 2009

We applaud—big time—the move by President Obama to limit the pay of CEOs on the taxpayer dole. If they can take our money to survive, they can cut back on the yachts and third homes. The Obama plan would cap salaries at $500,000 for top executives at firms that accept “extraordinary assistance” from the government. 

As the Economic Policy Institute noted, the financial services industry pays its CEOs more than any other industry—in 2007, those salaries averaged nearly $18 million. Even the median salary—the typical CEO salary, with half of all CEOs earning less—is massive, with median CEO pay in financial services roughly $16.5 million in 2007.

Contrast this with the average wage in 2006 of a U.S. worker—$37,078. The median wage is even lower—$24,892.

AFL-CIO President John Sweeney puts it this way: 

Workers across the country are disgusted with corporate excess. When families are struggling to get by, President Obama did exactly the right thing to limit outside pay awards and reform the broken system. Despite billions in losses, and hundreds of billions in taxpayer bailouts, Wall Street doled out $18.4 billion in bonuses in 2008. 

These reforms, from a say-on-pay vote to restrictions on golden parachutes, give our members’ funds the tools to hold boards accountable. These boards and senior executives failed the American public and the company’s investors through their focus on excessive risk taking and short termism. We welcome the administration’s effort to link pay to performance and focus banks’ senior executives on long-term value creation.

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