The best-paid CEOs in American business have overseen companies that were bailed out, been fired, and been caught committing fraud at alarming rates over the past 20 years, a new report finds. Out of the spots on an annual list of the highest-paid CEOs, nearly four in ten have gone to individuals who were eventually “Bailed Out, Booted, Busted,” according to the 2013 edition of the Institute for Policy Studies’ (IPS) review of CEO pay and performance.
The IPS report draws on the Wall Street Journal’s annual list of the 25 best-paid chief executives, dating back to 1994. Of the 241 individuals who have appeared on the list over the past two decades, a full 32 percent have overseen bailouts, been booted from their posts, or been busted for fraud. Report co-author Sarah Anderson told ThinkProgress that “many poorly performing CEOs appeared on the top-paid lists year after year.”
The chronic misalignment of pay and performance is most apparent among the CEOs whose companies received bailouts. The percentages for executives who were forced out or caught in fraud schemes are roughly the same. But bailed-out financial firm CEOs showed up far more often on the annual pay lists – taking up 22 percent of those 500 slots – than they do among the list of individual CEOs, 17 percent of which received bailouts.
One of those men – and all but four of them are men – is Dick Fuld, the former head of Lehman Brothers. Fuld made $466.3 million in eight years as CEO. Lehman Brothers’ 2008 bankruptcy was the largest in history and ignited the financial crisis. Fuld’s firm’s massive, complex web of investments was so central to the crisis, and so dramatically irresponsible, that it inspired the Hollywood crisis thriller “Margin Call.” Fuld isn’t exceptional, though. IPS chronicles dozens of financial executives who got very wealthy laying the groundwork for the crisis. The report’s top-line numbers don’t even include Angelo Mozilo, the notorious subprime lending CEO of Countrywide, who made $42.9 million in 2006 and escaped the crisis financially unscathed.
IPS offers more than depressing facts, however. The report recommends specific steps towards a more sane system of executive compensation that would better reflect actual performance. Two involve still-uncompleted Dodd-Frank rules requiring the disclosure of CEO-to-worker pay ratios and banning compensation structures that create incentives for “inappropriate risks.” The third is to end the taxpayer subsidy of stock-option executive compensation.