How nice. Why in the blazes are these people owed 2008 bonuses in the first place? Last year was the worst in decades. Constellation almost went bankrupt. Without government help, Citigroup and AIG would be bankrupt.
Compensation consultants have said for a quarter-century that lavish pay aligns CEOs' interests with that of shareholders. Executives pocketing millions during the worst stock crash since the Depression has falsified that proposition forever.
Broc Romanek, a former Securities and Exchange Commission lawyer and editor of TheCorporateCounsel.net, ridicules the notion that AIG and the Treasury Department couldn't revisit the promised bonuses.
"Whoever were the lawyers who analyzed it for the government and for AIG didn't do anybody any favors if they didn't present alternatives," he says. "Companies do it every day. It's Business 101."
Permanent reform requires enriching executives only if companies do well over the long term. CEOs should have to keep shares and options even after they retire instead of milking corporations for a couple of years and then pitching them into crisis.
More immediately, shareholders can rise up in rage. In a little-known codicil to the bailout legislation, almost every financial company getting bailout money must include a "say on pay" on this year's proxy ballots, says Scott Fenn, managing director for policy at PROXY Governance, which advises pension and mutual funds. So corporate owners get to vote up or down on fat-cat compensation.
Shareholders, you know what to do. Maybe 2009 will mark the popping of the last bubble - executive pay.
