Executives Took Home Millions While Driving Companies (and our Economy) into Ditch

by Deb Cupples |  Levels of complexity vary from business to business, but most businesses have one fundamental thing in common: money comes in and money goes out. 

Every dollar spent on executive pay, for example, is one less dollar to pay down a business's debts, to invest in expanding the business, to raise essential employees' pay (thus raising our nation's median income), or to create jobs.

As I reflect on the $700 billion bailout package (and other bailouts) that Congress and President Bush recently approved, I can't help asking this key question about those companies who have received or will receive money from us taxpayers: into whose pockets did those companies' dollars flow?

This does seem to be the year of the bailout. In addition to the $700 billion bailout, we taxpayers committed $85 billion to bailing out AIG, a company that also plans to reap the benefits of the $700 billion bailout. 

The Federal Government also agreed to lend companies from our nation's auto industry $25 billion to design more fuel-efficient cars.  Oh, and it reportedly will cost us taxpayer $200 billion to bail out Fannie Mae and Freddie Mac.

Given that more than $1 trillion tax dollars were committed to corporate bailouts thus far this year, you betcha I'm concerned about how the companies seeking taxpayer generosity had spent their money.

Typically, company executives with gigantic compensation packages get relatively unimpressive salaries.  The money starts rolling in via bonuses, stock options, and other forms of compensation.

That said, below is a list of CEOs from some of our nation's troubled companies and those CEOs  compensation for 2007. 

Note: Some companies have dozens -- even hundreds -- of executives pocketing company dollars that could otherwise have been spent on directly strengthening the companies that employ those execs.

I use the CEOs merely as examples, because their compensation figures are easy to find.   If I had data on lower executives' and managers' compensation, I would have included it, because it would give you a clearer picture of how much money flowed from our nation's troubled companies into the pockets of the people managing them.  Here's my little list:

Company	CEO	2007 Compensation
AIG	Martin Sullivan	$13.9 million
Fannie Mae	Daniel Mudd	$11.6 million
Ford Motors	Alan Mulally	$21.6 million
Freddie Mac	Richard Syron	$18.3 million
General Motors	Rick Wagoner	$15.7 million
Goldman Sachs	Lloyd Blankfein	$57.6 million
Lehman Brothers	Richard Fuld	$22 million
Merrill Lynch	John Thain	$83.1 million

Those figures are for only one executive from each company and for only one year's "earnings."  I shouldn't have to explain why I put earnings in quotes -- given that those companies apparently weren't performing well by the end of 2007.

Though we taxpayers helped finance the sale of Bear Stearns to JP Morgan this year, I didn't list Bear Stearns' ex-CEO Jimmy Cayne in the table, because he refused to take bonuses in 2007.

It wasn't that nice of a gesture: before Bear Stearns imploded, Mr. Cayne had pocketed, over the years, 161 million company dollars. After JP Morgan bought Bear Stearns, Mr. Cayne sold his Bear stocks for $61 million (much less than they'd been worth a year earlier).

Mr. Cayne has given me an idea: perhaps I should come up with a list of what some of the troubled, handout-seeking companies' CEOs pocketed during the three-to-five years before their companies went on the rocks.

USA Today has a list of CEOs from numerous companies and a breakdown of those CEOs' 2007 compensation.

About the $700+ billion bailout: a British paper reports that some Wall Street firms are considering not participating in the bailout.  I have no problem with not having to spend tax dollars buying toxic assets from companies that recklessly bought said assets in the first place.

I do find it odd, however.  The $700+ billion bailout was sold to our politicians based on the notion that our economy absolutely required emergency actions -- right now, with no time allowed for crafting a sensible and taxpayer-friendly bill. 

Here we are, a few days after President Bush signed the Bailout Bill, and various Wall Street firms think they make a go of it without our tax dollars?

Something just doesn't add up.  Memeorandum has commentary.

Other Buck Naked Politics Posts:

* Risky Buys Weren't Fannie CEO's Fault (Though He made $38 million for his efforts)?

* Nation Lost 159,000 Jobs in September

* AIG Spent $61 Billion of Bailout Money and Plans to...

* Let Jeremy Paxman Moderate Our Debates

* Saturday Night Live Nails Biden v. Palin Debate (video)

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Comments

[SplendidMarbles]

Finance is America's secret weapon. We don't need a conventional military anymore. Just send these bloated bastards overseas with their CDO's and assorted derivative products and watch the economies of our foes implode. It's too bad they've decided to turn on their masters instead. Check out my cartoon on this topic - I think you'll like it. (Let me know if you'd like a higher quality jpeg.)