Technology TransactionsRealty Viewpoint: Investment Bank CEOs Cash Out, Proving Life"s Not Fair
Thirty-one percent of top executives interviewed in a survey by the Business Roundtable said most will cut payrolls in the next few months. By how much is not known, but one thing is for certain -- they won"t cut their own pay.
One of the reasons people are losing their jobs is because the cycle of greed is coming full circle. Some of the Wall Street companies that helped perpetuate the mortgage-backed CDO investment scams are now laying people off.
But that didn"t stop their CEOs from cashing in while other people bled out.
Business Week published the paydays of the Bear Stearns leadership in March. Between 2002 and 2006, the Chairman, CEO, and former co-president received total compensation packages of $156 million, $141 million and $168 million, with bonuses between $9 and $12 million. "Then came the fattest year of all, 2006," wrote Business Week. "Bear"s mortgage origination and other credit products grew at a 27 percent clip, and the company"s expansion into these areas really paid off, at least for those at the top of the pay pyramid ... cash bonuses jumped to more than $16 million for Cayne, Schwartz, and Spector."
A New York Times survey in April found that the CEOs of the 10 largest financial firms were paid $320 million, while the firms lost $55 billion and the market price of the stock lost over $200 billion.
While Merrill Lynch shareholder value plummeted 41 percent in 2007, CEO John Thain, the highest earning CEO on Wall Street, pocketed nearly $84 million. Bear Stearns went bankrupt, saved only by the intervention of JP Morgan.
Now, pink slips are papering Wall Street as 10 percent of the investment bankers at Citigroup and Goldman Sachs are laid off. Some financial services CEOs have lost their jobs, like Wachovia"s G. Kennedy Thompson, Stanley O"Neal at Merrill Lynch, and Charles Prince at Citigroup.
They walked out with huge severance packages. O"Neal walked out of Merrill Lynch with over $161.5 million, and Prince "retired" with $40 million in severance.
Call it the debit side of the credit crunch.