The New York Times takes a good look this morning at the excessive executive perks yet to be wrung out of the banking system.
It had an executive compensation firm do an analysis of financial industry perks and found this:
Of 200 of the largest publicly traded banks that have received taxpayer money, about 61 percent, or 121 banks, paid an average of $10,835 in country club dues for their chief executive in 2007.
Nearly three-quarters, or 147 banks, spent an average of $20,668 in car and parking expenses. Corporate jets, now one of the biggest targets of Washington’s ire, were financed by 36 banks, or 18 percent of those now receiving taxpayer funds. More often than not, the banks let their leaders use the corporate jet for personal travel, at an average cost of $102,216. And regardless of size, many banks said they were “required” for the safety of the chief executive.
Check out the justification from the flack:
But others, like Regions Financial of Alabama, which posted an unexpected $6.22 billion loss in the fourth quarter and accepted $3.9 billion of taxpayer money, spent more than $23,000 on air travel in 2007 for its chief executive, C. Dowd Ritter. Like many banks, Regions requires its top official to avoid commercial aircraft for safety reasons. “You have far greater control of your environment in a private aircraft setting,” said Tim Deighton, a spokesman.
The Times says lots of the companies say they’re not changing anything—yet. Good quote here:
“The party may be over but there is still a lot of cleaning up to do,” said Paul Hodgson, a senior research analyst at the Corporate Library, a governance and shareholder advisory group. “Particularly in this climate, change is very seriously needed”…
“The banks don’t seem to have adjusted to the new paradigm they are operating under,” said Mark Borges, a compensation consultant. “They haven’t yet appreciated that when you take public funds, you now have a new class of shareholders that are going to be more vocal and impatient with the way you operate.”
It’s always amazed me that executives who make so much money can’t pay for things like their own gym membership:
Another small lender, UCBH Holdings, which caters to the Chinese-American business community, paid more than $43,700 in 2007 for a car and driver for its chief, Thomas S. Wu. It also covered nearly $20,000 in travel expenses for his wife to accompany him on business, and more than $3,300 in fitness club fees. Steve DiMattia, a spokesman for UCBH, which received $299 million in taxpayer funds after a plunge in its shares, declined to say if the bank would modify its perquisite program.
Let’s hope the days of looting the company are over (for a while anyway):
Great Southern Bancorp, with operations in three states, recently jettisoned a lake house that the bank had owned since the 1980s that was used by its longtime chairman, William V. Turner. The bank is also seeking buyers for a bank-owned boat, and it is looking for a partner to split the use of its Cessna jet.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum.
Kelly Polonus, a spokeswoman, said Great Southern put its plane, boat and lake home up for sale a year ago to reduce expenses. The bank’s share price dropped 48 percent last year and it accepted $58 million of taxpayer money.
GMAC has also grounded the private plane it had provided for Alvaro G. de Molina, the chief executive. Since receiving funds from the government in December, he and all senior GMAC executives now fly commercial.