Large bonuses for some CEOs raises concern

Recently, the news about compensation packages for CEOs in companies getting government assistance raised a lot of eyebrows. Some people say investors in these companies need to do more to make sure the CEO doesn't get rewarded for failure.

When word got out that roughly $18 billion of Troubled Assets Relief Program (TARP) money went to CEOs as bonuses, even though the companies they managed lost billions, plenty of people were upset.

Missouri Sen. Claire McCaskill said, "We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer."

The president wasn't too happy, either. Barack Obama said, "The American people will not excuse or tolerate such arrogance and greed."

The treasury reportedly is going to present new rules concerning compensation for executives getting government assistance. But some people say the president's stance on these bonuses isn't strong enough.

Organizational accountability consultant Linda Galindo said, "Saying they have to have some responsibility, they have to have some restraint and some discipline is part of the problem until he says, ‘You have to have total responsibility,'" she said.

Still, Galindo says she's surprised people are upset about the bonuses these CEOs received. After all, their contracts stipulated they'd receive large payments, even if the companies performed poorly.

"That's what the contract says. Who wouldn't sign that? So, from the perspective of the individuals who see nothing wrong with it, you will often hear, ‘I did nothing illegal,'" she said.

She says investors can do more to ensure that CEOs don't get these kinds of contracts. They need to ask company officials how the executives are compensated and if they get a bonus even if they fail.

"If they say, ‘We signed it under a non-disclosure agreement. We said we wouldn't tell,' then that's right there your answer," she said.

Allegiance COO Greg Greg Heaps said, "I don't think you should get your incentive unless you hit the objective, otherwise, why have the incentive? Just give a base pay and end it at that."

Allegiance has software and phone-based systems that let employees anonymously blow the whistle on unethical behavior. Heaps says employees complain about financial issues all the time.

"All of us, including these top-level executives, need to be fiscally responsible and need to be more conservative through this time," he said.

Heaps says not every CEO who got TARP money took a bonus. But, those who did, acted irresponsibly.

E-mail: pnelson@ksl.com

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