Obama Doesn’t ‘Begrudge’ Bank Bonuses
Source: news.yahoo.comPresident Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.
The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”
“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”
Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.
Blankfein and Dimon took their bonuses in stock rather than cash, which Obama encouraged other corporations to do. Such compensation, he said, “requires proven performance over a certain period of time as opposed to quarterly earnings.” He said that’s a “fairer way of measuring CEO success and ultimately will make the performance of American businesses better.”
His comments come just days after 2009 bonus packages were announced for Dimon and Blankfein. Dimon, 53, led New York-based JPMorgan, the second-biggest U.S. bank, to a profit during each quarter of the financial crisis. Blankfein, 55, was at the helm when New York-based Goldman’s shares doubled last year as profit soared to a record high. The two banks were among those that repaid the bailout money they received from the federal government during the financial crisis.
Obama said compensation packages over the last decade haven’t always been commensurate with performance and reiterated his call for shareholders to have a say in CEO pay.
“That serves as a restraint and helps align performance with pay,” he said. “Shareholders oftentimes have not had any significant say in the pay structures for CEOs.”
Blankfein’s payment of 58,381 restricted stock units, valued at $9 million at the Feb. 5 closing price of $154.16, compares with the Wall Street record $67.9 million he received in 2007. Dimon, who got a $27.8 million bonus for 2007 and a $1 million salary for 2008, received restricted stock units and options and no cash bonus for last year.
Joseph Evangelisti, a spokesman for JPMorgan, said the company would have no comment. Lucas van Praag, a spokesman for Goldman Sachs, also declined to comment.
The Obama administration named Kenneth Feinberg special master on executive compensation in June after a political outcry over bonuses paid to employees at American International Group Inc.
Feinberg, 64, ordered the seven companies whose pay he supervised, including Citigroup Inc. and Bank of America Corp., to emphasize long-term stock compensation rather than cash payments. Citigroup and Charlotte, North Carolina-based Bank of America repaid their federal bailout funds in December, leaving Feinberg with five companies, including AIG, under his supervision.
Feinberg told Bloomberg Television on Feb. 8 that Goldman Sachs heeded his “prescriptions” even as he called Blankfein’s $9 million total pay excessive. "I don’t believe there are more than one or two" executives making as much among the 700 he has had under his jurisdiction, Feinberg said.
Goldman Sachs said in December that the top 30 employees would receive all their year-end incentive pay in stock that they can't sell for five years. Blankfein's bonus, which he gets on top of his $600,000 salary, is subject to that restriction.
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