Don’t Like Uncle Sam? Follow J.P. Morgan
October 8, 2009
The pay of bank CEOs that have taken federal bailout money could be determined by Kenneth Feinberg, the Obama administration’s “pay czar.” In many cases, the contracts of the CEOs in question will not be affected, in some cases they will. Either way, much political hay will be made over CEO pay.
Well paid executives are a convenient political punching bag for myopic politicians and disingenuous activists. The same leaders who rushed through a multi-billion dollar bailout package last year for these banks are now championing a crackdown on the very CEOs they agreed to help bankroll.
Bankers are right to not want the government to dictate executive pay. Instead, maybe they should tune out the interventionist crowd and voluntarily follow the advice of J.P. Morgan.
Morgan was opposed to the kind of government intervention that would tell a bank what to pay its leaders, however, he also maintained that a company’s CEO should not make more than 20 times the average salary of his company’s employees. By my rough calculations, James Dimon, the CEO of Morgan’s namesake JPMorgan Chase, took home more than $19.6 million last year (a $1 million official salary plus options). That is approximately 228 times the $85,937 average salary of JPMorgan Chase employees. A spokesman for JPMorgan had no comment.
To be fair, it should be pointed out that the bank did repay its bailout funds. And JPMorgan Chase is not alone. In fact, Dimon ranked 82nd on Forbes’ list of executive earners for 2008.
Writing in The New York Times recently, columnist David Brooks noted that the culture war still being waged over abortion, gay marriage and the like is obsolete. It is the slide in economic morality we should worry about, he argues, something that affects both liberal and conservative America equally and will require a massive cultural movement to correct.
This movement could not start soon enough. We are long overdue to champion economic restraint and modesty, thrift and common sense.
And if our banks’ CEOs object to heeding Morgan’s maxim, could we at least ask them to trim their total pay to closer to 20 times rather than 200 times their company’s average while their banks are still on the dole? Because once you accept government cash, you play by the government’s rules, no matter how seemingly unfair.
The best way to get government off of your back is to act responsibly to begin with, and that means not rewarding yourself with tens of millions of dollars when your bank or company is bleeding cash and laying off workers. That’s not socialism; that’s actually the American way.
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