A looming question is whether bank executives should give back salary and bonuses earned before their companies were bought in distress sales or being bailed out with loans from the federal loans. Executives at seven major financial institutions that collapsed, were sold at distressed prices, or are now in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times by Equilar as reported by Gretchen Morgenson in her weekly business column. Almost half of that consisted of cash compensation.
Among those looking for clawbacks is Frederick Row, a Dallas-based money manager and founder of Investors for Director Accountability and Daniel Pedrotty, director of the AFL-CIO’s investment office. “This is really in our view a giant fraudulent conveyance, where money was paid out to executives at firms that were fatally undercapitalized,” said Pedrotty. “We are arguing for a recovery of money that was used by people who treated these companies as a giant ATM machine.”