Nearly 40% of CEOs on the highest-paid lists from the past 20 years were either bailed out, booted, or busted:

 

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Source: Executive Excess 2013

 

 

 

Executive Excess 2013:

20th anniversary Executive Excess report examines the “performance” of the 241 corporate chief executives who have ranked among America’s 25 highest-paid CEOs in one or more of the past 20 years.

The lavishly compensated CEOs we spotlight here should be exemplars of value-added performance. After all, sky-high CEO pay purportedly reflects the superior value that elite chief executives add to their enterprises and the broader U.S. economy.

The report’s key finding: nearly 40 percent of the CEOs on these highest-paid lists were eventually “bailed out, booted, or busted.”

  • The Bailed Out: CEOs whose firms either ceased to exist or received taxpayer bailouts after the 2008 financial crash held 22 percent of the slots in our sample. Richard Fuld of Lehman Brothers enjoyed one of Corporate America’s largest 25 paychecks for eight consecutive years — until his firm went belly up in 2008.
  • The Booted: Not counting those on the bailed out list, another 8 percent of our sample was made up of CEOs who wound up losing their jobs involuntarily. Despite their poor performance, the “booted” CEOs jumped out the escape hatch with golden parachutes valued at $48 million on average.
  •  The Busted: CEOs who led corporations that ended up paying significant fraud-related fines or settlements comprised an additional 8 percent of the sample. One CEO had to pay a penalty out of his own pocket for stock option back-dating. The other companies shelled out payments that totaled over $100 million per firm.

Over the past 20 years, we have seen no shortage of creative and practical proposals for reining in excessive executive compensation. Three pending reforms strike us as particularly urgent:

  1. CEO-worker pay ratio disclosure: Three years after President Barack Obama signed the Dodd-Frank legislation, the SEC has still not implemented this commonsense transparency measure. The reform would discourage both large pay disparities that can harm employee morale and productivity and excessive executive pay levels that can encourage excessively risky behavior.
  2. Pay restrictions on executives of large financial institutions: Within nine months of the enactment of the 2010 Dodd-Frank law, regulators were supposed to have issued guidelines that prohibit large financial institutions from granting incentive-based compensation that “encourages inappropriate risks.” Regulators are still dragging their feet on this modest reform.
  3. Limiting the deductibility of executive compensation: At a time when Congress is debating sharp cuts to essential public services, corporations are able to avoid paying their fair share of taxes by deducting unlimited amounts from their IRS bill for the cost of executive compensation. Two bills, the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S.1746) and the Income Equity Act (H.R. 199) would fix this outrageous loophole and significantly reduce taxpayer subsidies for excessive CEO pay.

Category: Corporate Management, Crony Capitalists

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “40% of Highest Paid CEOs Were Bailed Out, Booted, or Busted”

  1. Chief Tomahawk says:

    “40% of Highest Paid CEOs Were Bailed Out, Booted, or Busted”

    HA! There’s plenty of upside as 40% is quite a ways shy of 100%…

  2. DeDude says:

    No surprise. Extremely high pay is an indication of control fraud. The fact that the company is under complete control of a sociopath should be a clear indication that its likely to end in tears. I am still looking for an EST that only invest in companies that are not in the top 20 percentile of CEO compensation. I am convinced it would beat the market.

  3. murthy says:

    Did the 60% do significantly better?

  4. flipspiceland says:

    Nardelli, Thain, Blankfein, Cassano, …..why not name the names in addition to Dick Fuld? And how about their accomplices in government like Hank Paulson, Tim Geithner (where will he surface), Alan Greenspan, Bobby Rubin, and in our faces, once again—Larry Summers being offered up as our next Fed Chairman???

    The whole thing smells, walks and talks like a conspiracy of self-care takers. If one doesn’t believe that there is a gang even better organized than the Mafia taking care of one another no matter how badly they fail, then I guess it’s just my imagination.

    • a2ricedgti says:

      What Barry has here is just a summary. Click on the link “Executive Excess 2013″ to get to the website with more details. At the bottom there is a 2 minute video and links to an Excel spreadsheet and the full report.

      I’m reading the full report now…their writing style is a bit hyperbolic in favor of the “liberal agenda” which reduces their credibility in my eyes.

  5. Francois says:

    The history of surgery is characterized by the courage to fail, despite the consequences for their patients and themselves. The history of American CEOs is characterized by the right to fail without any consequences…but only for themselves!

  6. NoKidding says:

    But what percent finished their tenure with smaller personal wealth than they started with? I’m going to say less than 40%.

  7. 873450 says:

    Looking back:
    - Getting a government bailout after destroying a bank merits a bonus.
    - Calling a bailout an “investment” and getting away with it merits a bonus.
    - Committing a crime, calling it a “mistake” and getting away with it merits a bonus.
    - Paying a $750 million fine without acknowledging wrongdoing merits a bonus.

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