So What Happened to That Talk About Reining in CEO Pay?

By Chuck Collins and Sam Pizzigati, AlterNet. Posted June 25, 2009.

Last February, amid public anger over millions in bonuses at bailed-out insurance giant AIG, our top national political leaders rushed to express their outrage - and even took some steps to place a lid on over-the-top executive pay.

That lid has now come off.

Treasury Secretary Timothy Geithner, with his just-released rules and proposals on executive pay, has essentially turned the specific executive pay limits that President Barack Obama announced and Congress legislated this past winter into mushy prescriptions that pose no real threat to the windfalls to which CEOs have so thoroughly become accustomed.

Remember that $500,000 "cap" on executive compensation that the White House announced back in February? That maximum has now become a minimum. Under the new Treasury rules, a new federal pay czar will "automatically approve" any paycheck from a troubled enterprise like AIG that doesn't top half a million - and even allow with that paycheck "additional compensation paid in the form of long-term restricted stock."

None of this backpedaling on executive pay reform should surprise us. Ever since the early 1980s, the years when pay for power suits first started pirouetting up, up and away, the pattern has become depressingly familiar. A CEO walks off with a windfall. A Wall Street highflyer hits an unimaginably massive jackpot. Editorial writers tut-tut. News magazines run cover stories about corporate greed. Lawmakers hold hearings and earnestly insist on "pay for performance."

And nothing changes. The outrages just keep getting more outrageous.

Two decades ago, a commentator labeled Warner Communications CEO Steve Ross the "prince of pay." Mr. Ross was averaging, in the 1980s, all of $16 million a year.

In 1993, Walt Disney CEO Michael Eisner took home $203 million. An outraged Business Week called that sum the most any CEO "has made in a single year - or probably in an entire career in the history of American business."

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Chuck Collins is a senior scholar at the Institute for Policy Studies in its Boston office, where he directs the Program on Inequality and the Common Good. Sam Pizzigati, an Institute associate fellow who lives in Kensington, edits "Too Much," an online weekly on excess and inequality. They are co-authors of "Executive Excess," a yearly report on CEO pay. This column originally appeared in the Baltimore Sun and is reprinted here with the permission of the authors.

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