Like most workers in America, you’ve probably been more productive and spent more hours on the job than ever before while also seeing your paycheck stagnate, or even diminish. Well, as we’re all finding out, the rules are different for the one percent. Case in point: Bank of America CEO Brian T. Moynihan, who got a whopping 23 percent raise for his “work” in 2015 – while the company’s stock price dropped. JP Morgan Chase CEO Jamie Dimon got an even bigger raise of 35 percent, even though that company’s earnings were down at the end of last year as well.
When is the last time you got a raise when your company wasn’t doing well?
Actually, Moynihan doesn’t have all of it – yet. His annual salary remains at $1.5 million, while he has received half of a $14.5 million stock package. Whether or not he gets the other half will depend on whether or not the company meets “growth goals” between now and the end of 2018.
So what exactly did Moynihan do to actually earn any of this? According to Bloomberg Business, he “cut costs, raised capital levels and resolved more than $70 billion in legal issues,” most of which involved BoA’s takeover of subprime lender Countrywide Financial.
Not all of Wall Street’s self-styled royalty got hefty raises. As the performance of several large Wall Street banking institutions have lagged over the past several months, many CEOs saw their pay and compensation packages reduced. For example, Morgan Stanley CEO James Gorman got a 6.7 percent pay cut, while Lloyd Blankfein over at Goldman-Sachs saw a reduction of 4.2 percent in his compensation. Of course, they’re both getting paychecks well in excess of $20 million each – pretty close to the average CEO compensation in the U.S. – so forgive us if we don’t cry for them.
Even with his own cuts in pay and compensation, Moynihan will be getting almost $9 million.
And what exactly do these financial Lords of the Universe do in exchange for such outsized paychecks? Not much, apparently – at least, not nearly as much as is expected from the rest of us. CEOs themselves like to boast that their excessive compensation is well-deserved because they “work” to improve the performance of their companies. However, research indicates that there is virtually no connection between CEO pay and company performance. In fact, many of America’s largest corporations rig the system by exaggerating reported profits and setting growth projections at ridiculously low levels. According to Columbia University law professor Robert Jackson, Jr., corporate directors are “deliberately setting performance targets low so the management doesn’t have to meet market expectations in order to get paid.”
Not only does this gaming of the system put tens of millions of dollars into the pockets of overpaid CEOs who really do little more than spend mornings on the phone and afternoons on the back nine with fellow executives, it robs the U.S. Treasury – and by extension, we, the taxpayers of this country – of billions of dollars every year. Part of the problem is the tax code itself, which has long been rigged to favor the wealthy and corporations. Attorney Michael Donan, who served in the Treasury Department’s Office of Tax Policy under Clinton and Bush, points out that IRS rules are ambiguous. They allow a corporation to make its own definition of what constitutes performance, “more or less as it chooses.” Essentially, obscene CEO compensation constitutes a major corporate tax write-off. Donan says, “Officers can receive payments that satisfy the exemption even if the stock price is falling, revenues are falling and earnings are falling. Failure can be treated as success for purposes of the exemption.”
Welcome to American capitalism. Moynihan, Dimon and the rest of their ilk continue to live large and their companies go out of their way to give them lavish compensation packages while contributing as little as possible to U.S. society, the laws of which have allowed them to prosper so handsomely. Meanwhile, the rest of us wind up picking up the slack – earning less and less as living costs continue to rise, while at the same time, our roads, bridges, water systems, schools, and the rest of our infrastructure go to hell in a hand basket.