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Bailout bank CEO salaries very healthy
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Steve Chiotakis: More and more bailed-out banks say they’re eager to repay billions that taxpayers lent them. Wells Fargo and Bank of America just said that yesterday. Banks that pay off the debt aren’t bound by government-imposed salary caps. In fact, a new study shows top officers of some bailed-out banks are doing pretty nicely. From Washington, here’s Marketplace’s John Dimsdale.
John Dimsdale: The Institute for Policy Studies says CEOs of the 20 largest bailed-out banks were paid a quarter of a billion dollars since the start of 2008. The study’s co-author, Sam Pizzigati, says the hefty compensation is mostly thanks to some timely stock options.
Sam Pizzigati: When shares of the big bailed-out banks were trading at near all-time record lows, many of these executives got millions of new stock options exerciseable at the bargain basement price. Since then, thanks to the bailout, the shares of these companies have increased in value.
Pizzigati says such banks shouldn’t benefit from government tax breaks and low interest loans. But Tim Bartl of the Center on Executive Compensation says options give bank managers the right incentives.
Tim Bartl: A stock option is a very good way of tying executives’ compensation to how the company does and how well shareholders do.
Bartl says the bank executives can’t cash in their stock options for another few years. And that means their companies have to perform well consistently before the executives to benefit.
In Washington, I’m John Dimsdale for Marketplace.
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