Investment and financial companies have long had traditions of giving huge compensation to the top employees in salaries, bonuses and stock options. Fat salaries and bonuses were giving in Wall Street companies even as the stocks took wild rides and investors lost billions of dollars.
Base salaries for 2008 were $1.1 million, with bonuses rising to 13 percent, making the median annual salary $2.2 million. Another bonus for top employees is equity compensation, which increased 48 percent in 2008 to $30.2 million. What is equity compensation? It is used for new companies to attract top employees. Since new companies have little capital, equity compensation is given in the forms of stock options and restricted stock. Top employees also receive unlimited stock and incentives, and golden parachutes when they leave the company. Others may have unlimited access to the company jet, several homes, cars, etc.
The stimulus package millions given to top banks in trouble was turned around and given to the CEO's as bonuses; a practice that infuriated the public and members of the House and Senate. President Obama and members of Congress put caps on CEO salaries and bonuses and made sure these caps are secure until the companies pay the money back that the Stimulus paid out. Restrictions also gave the stockholders more say in Executive pay and bonuses.
Even though many companies gave the legislature a slap in the face when they awarded such huge bonuses to CEOs even though the company lost billions, not all companies were so irresponsible. According to a Reuters study, 15.6 percent of companies paid no bonuses to their top employee. This figure is double that of 2007.
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