Personal Injury Law

Growing Sense of Outrage Over Executive Pay

By Hurley, McKenna & Mertz

Finally, it appears that Wall Street executives are getting what they deserve. The Washington Post reports that bonuses this year are likely to be sharply lower than in years past. Johnson Associates, a compensation consulting firm, predicts annual incentive pay for senior executives will fall at least 60 percent this year at investment banks, and by 55 percent or more at commercial banks.

It?s about time. We have been writing about the excessive corporate executive compensation for years and it appears that the rest of the financial industry is finally seeing the light. Compensation is being scrutinized as never before, especially on Wall Street, where the year-end bonus season is coinciding with a government bailout of finance companies.

At a time when the average taxpayer already is feeling stretched and public money is being used to support an industry that paid out $33 billion of bonuses last year-- upper level management has an even greater duty than before to shareholders to not offer excessive pay packages and instead focus on corporate governance.

Since 1993, companies have been allowed by Congress to take a tax deduction for executive compensation over $1 million--but required that the pay be tied to performance. This is what created the culture where giant stock option grants make up the bulk of executive pay at many of the biggest public companies. Bonuses should be strictly connected to stock performance and we think that slowly, the agencies that monitor banking institutions and Wall Street will eventually get to that point. Public opinion will demand it.

Full post as published by Chicago Medical Malpractice Lawyer Blog on November 23, 2008 (boomark / email).