The Man in the Gold-Laced Flannel Suit

The excesses of the finance industry and executive compensation have been well documented, but other than a few brave souls who dare to speak on the subject, it barely crack the main stream newscasts on any given day. The greed and arrogance of corporate America is driving this country down the same road of visited by Rome and Great Britain. But what do we get instead – a cacophony of noise about Tiger Woods, Michael Jackson and Sarah Palin, squeezing out hope of hearing anything about what really affects our daily lives.

Let’s start with the poster child for greed – AIG. Before the market meltdown (caused in large part by AIG), the company had a stock price of $57 and was worth about $190 billion. After the financial markets collapsed, AIG had a stock price of $1.57 and was worth about $2.7 billion – a drop of 99%.

For about 99% of Americans, that kind of performance would have been met with a pink slip, a handshake, and a kick in the ass. But not AIG, because their executives are so special.

Deeming it “too big to fail” and scared an AIG bankruptcy would force Grandma and Grandpa to live on Alpo, the US Government (under Bush, but with full approval of the Democratic congress) gave AIG $170,000,000,000 (billion) to survive and avoid the dreaded corporate death panel.

That $170 billion is about $1,500 for every household in the US (makes those Nancy Pelosi $600 “stimulus checks” two years ago seem like a mere bag of shells. And those Pelosi checks – were not free lunches, but a loan against future tax rebates. Let’s see how much AIG repays).

Ok, so AIG is saved from the oncoming train. Where does a chunk of that money – nearly a half-billion dollars (taxpayer money – taxes from people on Social Security, taxes on unemployment, taxes on pensions etc.) go towards? – rewarding the AIG management for a job well done.

$165 million of that above pool went for ‘retention’ bonuses to employees in the financial products division – bonuses to ensure the people who brought the financial system to a screeching halt – stayed on board. Right after receiving those retention bonuses – 52 people quit!

Martin Sullivan, the CEO who oversaw this shining star of capitalism – got over $50 million when he left in June 2008. He will also receive a $3.2 million pension, and will pay for his health benefits – I guess no public option needed here! Catching AIG in a particularly generous mood, Sullivan was also able to get AIG to pay his taxes on this golden parachute as well.

Joseph Cassano, the Typhoid Mary of derivatives and the head of the division that single handedly nearly destroyed the entire planet’s financial system – got less than Sullivan – $34 million in bonuses before he left in 2008. Don’t cry for Joe, he did get $1 million monthly consulting fee to keep advising them on how to steal from the public get back on their feet.

Robert Willumstad, the CEO who replaced Sullivan lasted three months. For that round of slave labor he was paid $22 million in severance (which was later returned when a few people finally opened their mouths).

But the execs AIG are not alone in realizing the American dream, Many other have found their pot of gold an the end of the taxpayer rainbow:

Ken Lewis of Bank of America ($45 billion in bailouts) – has received $134 million in various payouts from the bank since 2001. Lewis also oversaw the buyout of a failing Merrill Lynch. The same Merrill Lynch that saw CEO John Thain buy a garbage can for $1,400.

Robert Lane, CEO of John Deere (you know, the tractor makers) – during the 2008 meltdown his pension benefits increased by $5.5 million dollars. Deere also paid the $15,500 into Lane’s 401(k) – which seems like money he can wipe his ass with. For the peons at Deere who will rely on the Deere pension fund – the one pays out to all its retired employees – well that lost millions.

Frederick Smith of FedEx can tell you when you absolutely positively need to be greedy. If you are a driver for FedEx Ground – you are considered an independent contractor – which means you can be fired at will and do not get overtime or reimbursements for expenses. Smith on the other hand – will get $26 million if he loses his job. Oh, those drivers – have to pay for their own trucks, gas, repairs and insurance, while Smith got $52,00 in unreimbursed expenses for use of the corporate jet.

Ray Irani, CEO of Occidental collected more than $180 million in 2008 when he exercised stock options. Other compensation including salaries and stock came to $35 million. Because there is so much complexity in his tax returns – Occidental paid for his tax preparation, and will continue to until he dies. In 2008, that tab to the H&R Block of the oil industry was $400,000. I guess he didn’t use TurboTax. And Occidental, well in their infinite wisdom and bylaws does not have the IRS $1 million cap on executive compensation for deductibility (I would need an accountant to explain to me how they get away with that).

James Bernhard of Shaw Group (a large construction company) – has a golden parachute and a golden coffin. When he dies, his heirs will get $40 million – including $65,000 in health benefits every year. The best part – Shaw Group will pay the heirs $18,000,000 in fees for Bernhard not to go to a competitor for two years – even though Bernhard would be dead. Resurrections a la Jesus or Ronald Reagan are expensive, you know.

James Wells of SunTrust Banks (those banks sure know how to sock it to us) received new stock options days before Obama signed the 2009 Recovery Act. These in essence replaced his worthless old options. Even though the stock price of SunTrust is down, the new options are at a lower strike price with more generous terms, meaning Wells has potential upside in the millions.

Robert Toll of Toll Brothers is CEO of the nation’s largest luxury home builders. When the housing market tanked, it was clear Toll was going to suffer in the bonus department. His underwater stock options were replaced with new ones. He still collected $46 million in 2008 by exercising options – and of course received new ones. Meanwhile the company lost nearly $300 million. Toll’s pay is not based on performance anymore, but on “management enhancement and efficiencies and financial market visibility and access.”

Robert Bond, CEO of Tyson Foods collected $14 million when he left in January 2009. He also got unused vacation pay. Golden Parachutes often not paid out for poor performance, but Bond (like most others) was allowed to step away and collect. When he left Tyson had just announced a loss of $122 million and the stock price had dropped by 50%. After “resigning” Bond was eligible to serve as consultant to the very company he ran into the ground at $800,000 per year. He could also still use the company aircraft.

Finally Wal-mart – in 2007 less than half of their employees were enrolled in the company’s health plan. 46% of Wal-mart’s employees’ children were on Medicaid or uninsured. Lee Scott, CEO in 2008, received an annual physical that cost $431,000. These physicals, given to senior management – are often not covered by insurance and are held in such places as the Mayo Clinic. A few years back Wal-mart considered a new way to keep health care costs down – to dissuade unhealthy people from working at Wal-mart.

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