Bank CEOs have taken a huge public relations hit for their role in advancing the economic collapse of 2008-2009. Now their overstuffed wallets are taking a hit, too.
The Financial Times released a study saying the average paycheck of top U.S. bankers has fallen 60% since 2009. But don’t look for your bank CEO in a soup line just yet. The study focused on CEOs at the largest banks in the U.S. and Europe, where CEOs like John Varley at Barclays (Stock Quote: BARC) and Jamie Dimon at JPMorgan Chase (Stock Quote: JPM) were among the “hardest-hit” bank executives.
The Times used numbers calculated by the compensation research firm Equilar to reach its conclusion that bank CEO pay was on the downslide.
According to Equilar, the average bank CEO pay fell from $14 million in 2008 to $6 million. The drop is tightly tied to the public relations fallout from the economic collapse of 2007-2008, when bank execs took huge bonuses even as their firms accepted billions in bailout money from understandably angry taxpayers.
It’s possible that bank shareholders had a say in the matter, too. Wary of the bad publicity and looking to rein in monstrous payouts, more stockholders are pushing for limits on executive pay. That should become even more common after the passage of financial reform. A provision in the recently-enacted Wall Street Reform and Consumer Protection Act called “Say on Pay” gives shareholders the right to vote on executive pay for banks.
Bank CEO’s don’t like it — 96% of bank executives oppose the government's role in setting compensation, according to a study by Grant Thornton — but consumer advocates say it’s about time. According to figures from the U.S. government, 17 banks that received Troubled Asset Relief Program funds handed out $1.6 billion in bonuses shortly afterward. Even White House pay czar Kenneth Feinberg called the payouts "ill advised."