Bailout Pay Cap Won't Affect These Three
President Obama's plan to cap at $500,000 per year the salaries of corporate executives for firms getting federal bailout money was designed to send a message: rein in the jaw-dropping pay of your top employees.
But what happens to the firms that have already gotten federal bailout money?
The Obama plan is not retroactive, meaning those firms are off the hook. At least three large firms who have already received Troubled Asset Relief Program funds — Citigroup, Bank of America and American International Group Inc. — have top executives that made much more than $500,000 per year (two automakers, General Motors and Chrysler, fall in the same category).
Here's a look at how the chief executives at those three firms fared recently when it came to executive pay:
Citigroup CEO Vikram S. Pandit — Pandit earned $3.1 million last year; he worked as a top executive at Citigroup before becoming the firm's chief executive in December 2007. That was a substantial decline from his predecessor, Charles Prince III, who as chairman and CEO received nearly $26 million in total compensation, including a $10.4 million "golden parachute" bonus, in 2006, and a $1 million base salary.
But don't feel bad for the 52-year-old Pandit. "By most standards, Mr. Pandit is rich already," The New York Times' DealBook notes. The Indian-born businessman made roughly $165.2 million when he sold his hedge fund, Old Lane Partners, to Citigroup in April 2007 (Citigroup paid as much as $800 million for the company).
Pandit's compensation breakdown:
Salary — $3,100,000 per year in 2007 as CEO and other roles
Retention equity award (bonus) (January 2008) — $2,500,000
Common stock — 1,094,948 shares now at roughly $3.50 per share: $3,832,318
Sale of Old Lane Partners (April 2007) — $165,242,244 ($100,273,630 invested in an Old Lane fund, to remain for four years dating from the sale or Pandit's death)
(Source: Citigroup's annual proxy statements)
Kenneth D. Lewis, chairman, CEO and president of Bank of America — Lewis, 51, is for all intents and purposes a well-regarded banker. U.S. Banker, a trade publication, named him the top banker nationwide in 2001 and 2008. In 2007, Time magazine named him one of the 100 most influential people in the world.
But Lewis, a Mississippi native described by some as calculating but "cold and dispassionate" when it comes to business matters, oversaw Bank of America as it merged with Merrill Lynch a few months ago. At the time, he had said his company would not need federal bailout money.
Now, the Charlotte-based banking giant has gone back to the Treasury twice. The government is now the largest shareholder; the latest investment in Bank of America brings the taxpayers' stake to about 6 percent.
Lewis's compensation breakdown:
Salary — $1,500,000 per year in 2007
Cash incentives (bonus) — $4,250,000
Common and restricted stock — 4,477,194 shares, recorded as $11,065,798 worth of stock awards
(Source: Bank of America's 2008 proxy statement)
Martin J. Sullivan, former president and CEO of American International Group Inc. — Sullivan took over as AIG's top executive in 2005 after founder Maurice R. "Hank" Greenburg was forced out.
To say the 54-year-old Sullivan had a tough time in his three-plus-year tenure is to put it mildly.
When he took over, AIG was the subject of several criminal and civil investigations. Record-keeping was shoddy, federal regulators say. In his first 18 months, three hurricanes and an earthquake damaged the firm's finances. The subprime mortgage meltdown, which hit the company especially hard, began last year.
But still, before he was ousted in June 2008, the British-born businessman made $14.3 million in salary and compensation, including a $1 million salary and a $2.5 million cash bonus.
Sullivan's compensation breakdown:
Salary — $1,000,000 per year in 2007
Cash incentives and option awards (bonus) — $12,276,078
Common and restricted stock — 353,467 shares, recorded as $11,065,798 worth of stock awards
(Source: AIG's 2008 proxy statement)
By Derek Kravitz |
February 4, 2009; 7:20 PM ET
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