Bank of America CEO Explains How He Beat Wall Street

Is the new financial capital of our country located in Charlotte, NC? 60 Minutes traveled down south to talk to CEO Ken Lewis about his bank, its recent purchase of Merrill Lynch, whether or not the bank bailout is “socialism” and the economic crisis in general.

Here’s what Lewis had to say about executive pay:

“I think they were overpaid,’ he said. “It’s more egregious in financial services than any other industry that I know of. We need to cut back compensation in this industry.”

“So this is a question everybody wants answered: Is this Socialism?” Stahl asked. “Have we now taken a huge step away from the free-wheeling Capitalism that we’ve known for the last 30 or so years?”

“I don’t know what we’ll call it, but it will be different,” he said. “And there will be more regulation. The Golden Era of financial services is over, in my opinion.”




Under New Ownership: Bank Of America
[60 Minutes]

Comments

Edit Your Comment

  1. Ben Popken says:

    A lot of banks have had their headquarters in Charlotte for some time.

  2. DeltaTee says:

    CEOs, just like star athletes, are not overpaid–they are paid what the market will bear. If they were not worth what they are being paid, then the company would not hire them. Each company tries to pay the best salaries, to attract the best talent, to out perform the rest of the competitors. They take a risk (large salary) in order to get a reward (stockholder value).

    This is capitalism at work.

    • nataku8_e30 says:

      @DeltaTee: What risk do CEOs take? I think they’ve demonstrated that they can completely destroy a company and profit from it immensely. Just about the only thing a CEO could do that would end in anything but massive financial gains would be to commit illegal activity in such a blatant and inexcusable way that they’d be convicted. Clearly the large salaries didn’t work to attract top talent, which is one of the contributing factors to of these companies with extremely well paid CEOs going bankrupt. Maybe you could extol some of the virtues of trickle down economics while you’re talking out your ass.

      • DeltaTee says:

        @nataku83: “They” referenced the companies taking the risk of paying a large salary–not the CEO accepting it (though CEOs do take on a large risk, for which they are justifiably compensated).

        “Joe the Plumber” is a good example of trickle down economics. When we help the small business owner, he grows his business, hires more people for a decent wage so he can expand his business. Are you saying we shouldn’t try to generate new jobs in this country?

        @KyleOrton: Would you take a job that required being on the job 24/7, a total dedication to all things corporate, without vacations? What if you also knew that any lapse in judgment (by you or anyone else) would result in your immediate termination (and possible jail time). And, that if you are terminated, then you will likely never be able to work in your field again. How much money would it take for you to accept this job? Would you want to get a guarantee that if something goes wrong, you would have money to live on?

        @Snarkysnake: I am sure that Apple would much rather have you than that overpaid Steve Jobs character running the show. It’s not like he’s got the vision for where the corporation is headed–he’s just a cog in a machine (who happens to get a corporate jet to do with as he pleases).

        Fraternities will often ask non-members to join, but no one is forced to. Companies are free to hire any independent person that they want to to lead them and pay them whatever they think they are worth. (Unless of course you look at it like a union, where everyone should be paid the same, regardless of ability, and you shouldn’t be able to hire someone unless they are a member of the union.)

        @EyeHeartPie: Steve Jobs is the only CEO I know of that sets his salary, and that is $1/year.

        • Snarkysnake says:

          @DeltaTee:

          I never said that I could do any better (or worse) than the vast majority of these hired hands. Your use of Steve Jobs makes my point for me. He owns a LOT of his company.The last thing he would do is run it into the ground.He doesn’t make a lot of salary. He SHARES the profits with other shareholders in proportion to ownership instead of taking his first and determining what his partners should get.

          • DeltaTee says:

            @Snarkysnake: How is it that Steve Jobs came to own a great deal of Apple shares? (Hint: He wouldn’t own many of them based on your compensation plan outlined above.)

            • ludwigk says:

              @DeltaTee: Steve Job’s compensation package is “someewhat” innovative in that he gets stock options that vest when certain performance objectives are met. Since his compensation is almost entirely in options, his compensation is “performance based”.

              A lot of CEO compensation packages are NOT performance based, and your comments truly indicate your ignorance in such matters. CEO compensation packages often include clauses that cover every possible type of failure. Early retirement, ousting by the board, failure to improve earnings, etc. What risk are you speaking of now?

          • papahoth says:

            @Snarkysnake: No he backdates his stock option illegally.

        • nataku8_e30 says:

          @DeltaTee: I’m not sure you’re all that familiar with “Joe the plumber” who was basically a fuck-up who couldn’t understand the basics of any kind of tax plan and whose idiocy was manipulated by both presidential candidates. More specifically, trickle down economics doesn’t really apply to small business owners even though individuals such as yourself like to set the income bar down so low that you can pretend that it does. Most importantly, trickle down economics doesn’t help the small business owner and it doesn’t grow the economy. It’s a falacy that is used as justification to concentrate wealth in parts of the economy where it will do the least good.

          Your first point is correct though; I did misinterpret your sentence. It wasn’t immediately clear what the object of “they” was, but from the context it does appear to be “the companies” and not the CEO.

        • papahoth says:

          @DeltaTee: You mean the Steve Jobs that illegally backdated stock options because he didn’t do a good enough job of getting the stock price up so he backdates them so he can grab unearned money? Would that be the Steve Jobs you are talking about? I did not realize Steve Jobs owned Apple. Always thought the shareholders did. Silly me. And yes, I’ll take that job. The CEO that runs Costco makes less than $1 million a year. How about that?

    • KyleOrton says:

      @DeltaTee: That only works if the profits are actually profits.

      And how does that explain the wads of cash when someone’s fired? There’s no reason to reward someone you’re canning. This can’t be capitalism, because capitalism means bad things for those who don’t perform.

      The problem is that the highest paid were able to decide their own worth and compensate themselves.

      • copious28 says:

        @KyleOrton:
        Delayed compensation. I am hiring your for X dollars today. While I am working for you, I am building up the value to justify my golden parachute. If the amount is $20 million and I work there for 5 years, then the amount is really delayed compensation of $4 million per year.
        Really, I think they were trying to avoid shareholders getting fussy about being paid 400 times the amount they are worth.

        • dweebster says:

          @copious28: should be tied in some way to a maximum of multiples of the mean wage at the company, including worldwide operations.

          Chinese workers doing your bidding at $0.15/hr? Then the executives get to share in the “globalization” of the workforce, too. THERE’s an incentive to support America – but you’ll never hear a peep out of the politicians quietly selling us out.

    • upsidedownpaddle says:

      @DeltaTee: capitalism needs capital. The capital went away so the taxpayer provided it, so we get to decide how much we pay them via represention by the Congress and Benny. We own the CEO’s capital so we get to pick how much we pay Her. That is capitalism at work.

    • Snarkysnake says:

      @DeltaTee:

      “They take a risk (large salary) in order to get a reward (stockholder value).

      This is capitalism at work. “

      Are you serious ? I mean do you really believe what you wrote up there in the quote or are you as crazy as a shithouse rat ? CEO’s in this day and age don’t take any risk…The shareholders take the risk.Lot’s of CEO’s own no more stock relative to their income than the guy turning a wrench.(And LOTS of boards own no stock at all) Shareholders take the risk that some asshat will run the company into the ground and that they will get a better return on their investment than they could get in a guaranteed vehicle (like a dormant savings account). CEO’s are just like the guy on the assembly line, they are employees. Nothing more,nothing less. They just happen to be much better compensated because with some rare exceptions , they pretty much decide what they think is a fair salary. That addresses the first asinine point you made,the one about what the market would bear. When the CEO picks the board,and the board pays the CEO what the CEO wants,THEN , the CEO sits on another board to determine that CEO’s salary,thats not a free market. That is just like a bunch of fraternity brothers looking out for themselves.I truly hope that a LOT of your life savings are tied up in the stock of some company that gets plundered by its “fair market ” CEO someday.Then you will learn a lesson that will be hard to forget : These guys are just looking out for themselves and no one else.

    • EyeHeartPie says:

      @DeltaTee: When you get to decide how much you get paid, regardless of how well you are actually doing your job…that is not capitalism.

    • theczardictates says:

      @DeltaTee: Sorry, but that’s hopelessly simplistic. There is no effective marketplace for CEOs, and their salaries are not set by the open market. Why do you think US CEOs make so much more (compared to employees) than their European or Japanese counterparts? Are US CEOs really that much more brilliant?

      Salaries at the top of large companies are typically set by a “compensation committee”, usually a subcommittee of the board of directors… which is often filled with other CEOs who have a vested interest in seeing the standard to which their own salary is compared go up.

      It is a CONSTANT complaint of stockholders that there is insufficient independent voice or overview in the setting of executive compensation.

      And as for risk/reward… it seems that the risk is all on the side of the company. The CEO gets paid millions even when the company tanks and the stockholder value falls, gets guaranteed millions more if he is fired, and even gets millions in a golden parachute if the company is acquired or fails completely! It is very well documented that there is NO correlation between CEO compensation and stockholder value.

      • DeltaTee says:

        @theczardictates: CEOs are hired on the open market, just like you or me. The lack of “correlation between CEO compensation and stockholder value” is the risk that the companies take. Many hope for larger rewards for larger risk.

        @zlionsfan: Teams take risks by hiring the players that they want that can help the corporation make a profit. You don’t necessarily have to pay outsize salaries in the NBA to have a team–you just won’t get the best talent. And this is fine for some teams–look at the history of the LA Clippers and how they have chosen to make money as the second best pro basketball team in LA.

        @BrianDaBrain: If a company did not feel they were getting a good value, they would hire someone else. It doesn’t get much freer than that.

        • papahoth says:

          @DeltaTee: You mean like the idiot savant Bernie Ebbers? He only knew how to buy companies, but not actually run one? The one rotting in jail for the rest of his worthless life? Why wasn’t the board or the shareholders able to remove his worthless ass? Because the board was his buddies and companies and the SEC under Bush has fought shareholder rights tooth and nail. CEO’s are not always hired on an open market. You are wrong. And companies that are stocked with buddies on the board do what Enron do — nothing.

    • JacquelineFazoo says:

      @DeltaTee:

      CEO compensation is not ‘capitalism’ at work, it’s government regulation at work. Corporations cannot exist except through very specific government legislation allowing them to. This legislation allows the companies to be treated as their own legal entities, in many respects.

      If we were talking about the CEOs of unlimited liability companies, or companies where their liability was only through insurance purchased on a free insurance market, then you would be correct.

      Unlimited liability companies don’t tend to appoint CEOs, though.

      All that being said, there’s nothing magical about the word ‘capitalism’ that makes everything about it right, or wrong. There are problems as well as advantages to any system of thought, especially in political economy. In my opinion, there’s much to be said for pragmatism, and an end to judging ideas by what school of thought they happen to come from.

    • zlionsfan says:

      @DeltaTee: I’ll give you credit, though, it’s a good analogy: star athletes are no more an example of capitalism than CEOs are.

      Athletes’ salaries are hardly an indicator of value … in many cases, they’re artificially restricted (because we don’t really want unfettered capitalism in professional sports, not unless you don’t mind things like watching your season tickets go up in smoke mid-season because your local franchise was poorly run and went bankrupt), and in the rest, they are just the most a team was willing to pay for them for whatever reason. Many times, that turns out to be far more than they were worth. (Exhibit A: Carl Pavano.)

      Basically, both positions have salaries that simply reflect what some fools are willing to give them. They’re rarely related to current performance, and the people who ultimately pay those salaries have little to no say about them.

    • BrianDaBrain says:

      @DeltaTee: It bothers me when people run around calling overpaid CEOs part of the free market. It’s not, and you’re disillusioned if you think otherwise. The CEOs in major corporations are all friendly, and all sit on each other’s boards, just as Snarkysnake mentioned. They decide each other’s salaries, and since they are all friends, it’s greatly inflated. That has diddly squat to do with a true free market.

      • Mr_D says:

        @BrianDaBrain: What do you propose we do, then? Cap salaries? Most of these CEOs are already quite wealthy. If pay was capped at $250,000, they might not bother.

        Even if there’s no real free market value, the following is still true: pay attracts talent.

        • Snarkysnake says:

          @Mr_D:

          I’ll tell you what we do. Pay the silly bastards in stock. Not stock options,but stock. Payable in full 5 years after they leave the company. Give them a nominal $250,000 per year (anybody can live on that ) and expenses. If the company files Chapter 11,they get in line with the other unsecured creditors (this might remove the incentive to profit on both sides of a bankruptcy filing through “retention plans” which are just theft in plain sight).No more bankruptcy proof trusts (like Delta set up for execs). That is a fraudulent conveyance of shareholders money.

          The other point : Pay attracts talent. Agreed,but it also attracts rogues. Look up Gary Winnick (of Global Crossing fame) sometime.Jeffrey Skilling. Andy Fastow. Bernie Ebbers. The list could go on for miles.These people are no different than common thieves.

        • chrylis says:

          @Mr_D: In addition to the already-suggested restricted stock grants, require shareholder votes on compensation packages. The problem isn’t high CEO pay; it’s that there’s essentially a “trust” between compensation committees and that shareholders have no direct say about the compensation.

        • papahoth says:

          @Mr_D: Simple, independent boards that are not stocked with the CEO’s buddies and accountability to the shareholders. Those pesky shareholders that actually own the company. And that means that funds that own in the company vote in the shareholder’s best interest, not the CEO’s. All funds should be required to publish their votes and clearly explain why they voted the way the did.

        • dweebster says:

          @Mr_D: …and/or people who value money over their soul.

    • AtomicPlayboy says:

      @DeltaTee: [in your defense]

      To all those who are arguing that CEO pay determination is somehow “not capitalism”: could you please explain how it does not follow the common definitions thereof? Or could you suggest an alternate economic system whose rules are more applicable?

      You may not like free markets, and wish that they were, in your view, “fairer”, but this is exactly the way the system works, and it works exceptionally well. If you believe that the recent debacle (which was exacerbated by, if not caused by, clumsy government tinkering with markets) has somehow invalidated the last couple of centuries of advancement brought about by capitalism, you’ve got a rather unrealistic view of economics. Yes, some people will make seemingly obscene, disproportionate amounts of money from the businesses they run, but that is a necessary consequence of the free market system which has elevated the living standards of most of the civilized world. Free markets mean that business owners are free to pay themselves whatever the market will bear. It’s not perfect, but it’s the best system around.

      Arguing for free markets is probably moot at this point, as it is likely that in two weeks we will elect a president who will, along with a compliant Congress, do everything he can to move the country in a socialist direction. So, DeltaTee, you lose, and your critics win. For now.

      • Tiber says:

        @AtomicPlayboy: Capitalism is based upon the concept that there is a seller, who is trying to sell a product/service for the highest possible profit, and a buyer, who is trying to receive a product/service at the lowest possible cost. Why this does not work is because there is no cost to the buyer (the board). Do you think CEOs would be paid nearly as much if the money came out of the board member’s pockets instead of the company’s?

        Saying that something should be accepted as-is because there is no apparent better system is a faulty argument; it assumes that there is no better system that hasn’t been discovered yet. Feudalism was the best system around when everyone was engaging in barbarism, so there is obviously no better form of government! Egregious executive pay is not a necessary consequence, because alternatives have not been explored. Pay could be done through a shareholder vote, a neutral expert could be brought in to appraise the shareholder, etc.

        Business owners should be free to choose a reasonable salary. The thing is, the CEO and the board do not own the company, the shareholders do. And a great many of them are not having their voices heard.

        Lastly, I think you’re a little late to be predicting the end of free markets. Government has had a hand in business for a long time, it’s merely a matter of how much. The recent bailout was just another (bad) example of that. If this is capitalism, then sign me up for socialism, ’cause Europe is doing fairly well by comparison.

        • AtomicPlayboy says:

          @Tiber:
          “Capitalism is based upon the concept that there is a seller, who is trying to sell a product/service for the highest possible profit, and a buyer, who is trying to receive a product/service at the lowest possible cost. Why this does not work is because there is no cost to the buyer (the board). Do you think CEOs would be paid nearly as much if the money came out of the board member’s pockets instead of the company’s?”

          So are you saying that board members have no stake in the success of the company for which they select leaders?

          “Saying that something should be accepted as-is because there is no apparent better system is a faulty argument; it assumes that there is no better system that hasn’t been discovered yet. Feudalism was the best system around when everyone was engaging in barbarism, so there is obviously no better form of government!”

          You’re throwing out a straw man here. I didn’t say that capitalism is the best economic system possible, just that it was the best system the world has ever seen. As such, I’m implicitly saying it’s better than socialism, which is the popular alternative, and that until we see some viable, superior alternative, I think it’s just fine.

          “Egregious executive pay is not a necessary consequence, because alternatives have not been explored. Pay could be done through a shareholder vote, a neutral expert could be brought in to appraise the shareholder, etc.”

          Shareholders _do_ get a vote! You don’t like the way the company wants to spend your money on executive pay, or maybe you don’t trust the guys they’ve picked to run the show? You sell your stock and buy into a company that you deem to be more responsible. Perfectly capitalistic and democratic. Of course, this requires that you pay attention to company governance, which, like political governance, seems to be too be beyond the grasp or effort of most.

          “Business owners should be free to choose a reasonable salary. The thing is, the CEO and the board do not own the company, the shareholders do. And a great many of them are not having their voices heard.”

          See above. If you don’t think shareholders have their voices heard, you should have a talk with a CEO toward the end of a fiscal quarter. They tend to hold the stock price, a proxy metric for the confidence that stock owners and buyers have in the company, in high regard.

          “Lastly, I think you’re a little late to be predicting the end of free markets. Government has had a hand in business for a long time, it’s merely a matter of how much. The recent bailout was just another (bad) example of that.”

          I’m not predicting the end of free markets, but I’m certainly predicting the onset of some grievous wounds to it at the hands of a socialist-leaning Obama government. At least we agree that the bailout was a rather horrific example of this government tinkering. Why do you want more?

          “If this is capitalism, then sign me up for socialism, ’cause Europe is doing fairly well by comparison.”

          Doing well at what? If you define a nation’s strength, progress, or relative well-being by the number of mandated vacation days or the ability of a plump government teat on which to suckle, then perhaps you’ve got some winners in Europe. By any other measure – economic, military, technological, scientific, etc. leadership; cultural diversity; opportunity for social and economic advancement; the list goes on – I’d say the US is “doing fairly well by comparison”. If you don’t believe so, and you want to sign up for socialism, they’ve got plenty of room for in Europe, so there’s no need to cripple the American system with it.

          • Tiber says:

            @AtomicPlayboy:
            “So are you saying that board members have no stake in the success of the company for which they select leaders?”

            Of course they have a stake. However, this is not a matter of success vs. failure. Many of these companies could do well if the CEO made $1 million, or $100 million. The difference is the company could have had $99 million more had they paid him the $1 million. What I’m saying is the board members have little incentive to try and negotiate getting the would-be CEO to sign up for the minimum amount they can get away with. My statement meant that if board members had a direct, immediately noticeable stake in what the CEO makes, they would be less likely to give such high salaries.

            “You’re throwing out a straw man here. I didn’t say that capitalism is the best economic system possible, just that it was the best system the world has ever seen. As such, I’m implicitly saying it’s better than socialism, which is the popular alternative, and that until we see some viable, superior alternative, I think it’s just fine.”

            I never thought that you thought that capitalism was the best possible system. What I’m saying is, if you accept something as “good enough” just because there is no already existing better alternative, nothing will ever change. Let me try another example. Riding on horseback was far better than walking, so it was the best thing at the time. But imagine if the inventor of the automobile thought that. I’m saying that progress can’t happen if everyone believes that the current model, while flawed, is acceptable. Also, I think you misunderstand what I’m saying should be done. I’m not talking about overhauling the entirety of capitalism; I’m talking about tweaking the part about how CEOs are paid. You’re making this out to be far bigger than it is.

            “Shareholders _do_ get a vote! You don’t like the way the company wants to spend your money on executive pay, or maybe you don’t trust the guys they’ve picked to run the show? You sell your stock and buy into a company that you deem to be more responsible. Perfectly capitalistic and democratic. Of course, this requires that you pay attention to company governance, which, like political governance, seems to be too be beyond the grasp or effort of most.

            “If you don’t think shareholders have their voices heard, you should have a talk with a CEO toward the end of a fiscal quarter. They tend to hold the stock price, a proxy metric for the confidence that stock owners and buyers have in the company, in high regard.”

            You’re also turning this into an all-or-nothing proposition. Yes, you can sell your stock. However, the CEO pay is just one of very many reasons to invest/not invest in a company. For instance, Comcast has some of the worst customer service ever and one of the highest paid CEOs. However, it is the sole high-speed internet provider in many areas (including my own), so you could have a monkey as CEO and the company would do well. I think the company is horribly run, but it would still be a fairly good place to invest. If I don’t buy stock there, or sell any stock I (theoretically) have, is the CEO going to attribute that to how the company is run, or to the market? I’m saying that selling stocks shouldn’t be the only way to get the CEO’s attention, it should be an issue that shareholders can easily bring up and be seriously listened to.

            “I’m not predicting the end of free markets, but I’m certainly predicting the onset of some grievous wounds to it at the hands of a socialist-leaning Obama government. At least we agree that the bailout was a rather horrific example of this government tinkering. Why do you want more?”

            I was exaggerating on the “end of the free market” part, just FYI. The government is going to tinker no matter what, so I personally believe it might as well do some good in the process.

            “Doing well at what? If you define a nation’s strength, progress, or relative well-being by the number of mandated vacation days or the ability of a plump government teat on which to suckle, then perhaps you’ve got some winners in Europe. By any other measure – economic, military, technological, scientific, etc. leadership; cultural diversity; opportunity for social and economic advancement; the list goes on – I’d say the US is “doing fairly well by comparison”. If you don’t believe so, and you want to sign up for socialism, they’ve got plenty of room for in Europe, so there’s no need to cripple the American system with it.

            Let’s see, by measure of economics, growth has been slow, but they seem quite a bit better at preventing major collapses. In terms of military, which has nothing to do with capitalism/socialism by the way, they’re not massively overspending like the US, so I consider that a plus. Technologically, I have no idea on. Scientifically, many countries in Europe, plus Canada, are ranked higher in terms of math/science education. Leadership and diversity have nothing to do with capitalism/socialism, so I’ll skip those alone. As far as opportunities for advancement, I’m not totally sure, but they seem to have few problems with the idea of female/minority Prime Ministers, so that doesn’t seem to bad. Is there anything else you’d like to compare? I’m sure there’s plenty of room there. However, I’ve got a job and am fairly comfortable here, but I’ve got no hangups if I see a good opportunity. But I guess you’re right, there’s no need for socialism to cripple the American system; capitalism has managed that quite well on its own.

      • papahoth says:

        @AtomicPlayboy: There is nothing free when a board packed with the CEO’s buddies decide salaries. Or a compensation firm that does other business with the company. Independent boards that owe their allegiances to the owners of the company, i.e., the shareholders, as its suppose to work is what is required. Shareholders that are able to impact votes at shareholder meetings with funds that vote in the best interest of the shareholders. How about that? The owners of the company actually reaping the benefits.

    • alstein says:

      @DeltaTee:

      Look at foreign CEO salaries. If CEO’s were not overpaid in this country, we’d have higher CEO Salaries in those countries, and much better run businesses.

      The fact that this isn’t the case is an indicator of a failed market.

    • frodo_35 says:

      Thats bs. Star athletes don’t have their salary set by their buddies and do the same for them regardless if it means the team loses. We all know its a rich good ole boy network.

    • Hodo says:

      @DeltaTee: Umm, yeah, sure. Very cutting analysis. You are aware, I’m sure, that most CEOs appoint their board members, and it’s a subset of the board that makes up the compensation committe, right? That’s be like T.O. “stacking the deck” with his buddies and teammates to decide what he should make next year . . . your analogy kinda’ starts to break down. Also, just for the record (and you’re ill-considered analogy aside) you’re saying that professional sports should be the MODEL by which we operate our society? I’d say that when most people I know look at professional sports, they see a system (culturally) that’s already broken. But lets return to the “capitalism” argument for a moment. Ever wonder why so many companies have a growth mantra? I mean, sure companies want to grow, but ever wonder why they do it at a break neck pace? It just MIGHT be because CEO compensation scales with company size (statistically) not profitability.

      Your analogy fails on so many levels I’m really hoping you didnt’ spend too much time coming up with it. If so, it’s a rather blatant indictment of your intellect.

      • Anks329 says:

        @Hodo: Actually, board members are elected by the shareholders. And if, as everyone else has said in this thread, the CEO doesn’t have a lot of share in the company, then how would he be electing the board members?

        • Hodo says:

          @Anks329: Yes, and how does one “get on the ballot” to be a board member again (and don’t reply with how it works “in theory” . . . reply with how it works in practice)?

          • DeltaTee says:

            @Hodo: Each company will be slightly different. Call the investor relations department of a company that you own stock in and they will be happy to inform you of the process. Usually it involves going to the companies annual meeting, nominating yourself and having enough shareholders vote for your nomination. In reality, it is not much different than becoming president of the United States.

      • DeltaTee says:

        @Hodo: I didn’t imply that professional sports should be a model of anything, I used it as an example more people could relate to. The salary of star athletes goes up as does the growth in wins.

        Please stick to the arguments and avoid turning this into a personal attack–it’s un becoming.

    • johnnya2 says:

      @DeltaTee: This is absolutely a ridiculous argument. Many CEO’s sit on their own boards, so have a reason to keep salaries high. One hand washing the other. Incompetence abounds in the board rooms of this country AND shareholders actually can not even vote to change it in most corporations. Yes thats right, the OWNERS can not have a vote to change the CEO. They must first change the board who then can change the CEO. Unless you are ultra wealthy (Carl Ichan, Warren Buffet) you have no voice. The CEO also can ‘cook the books” to make it look better than it is. Ask Ken Lay a week before his company melted down how it was doing, and he still said it was ok. The behavior is criminal.

    • UgoChimpanzee says:

      @DeltaTee: Thank you – I’m glad at least a few people understand this.

      The whole notion that “______ is paid too much” is nothing more than an opener to the proposition that government force be used to “do something about it.” The market is doing something about it right now – huge banks are failing – and the government, instead of letting it happen, is enforcing that behavior by propping them up. There are countless smaller banks that made good decisions that will now join the rest of us in bailing out the banks that deserve to fail, all because people think that it is the government’s place to “do something about it.”

  3. sleze69 says:

    Bank of America beat Wall Street? I guess by their year after year domination of the Worst Corporation tournament they also beat Main Street…every day.

  4. GearheadGeek says:

    What he should perhaps have said is that the “Gilded Age” of financial services is over… there’s an apt parallel to the Industrial Revolution’s Gilded Age. Robber barons.

  5. Git Em SteveDave loves this guy--> says:

    Yeah, they “beat” Wall Street by taking over my company and eliminating my job.

  6. NotChoinski says:

    Remember when everyone hated Saddam Hussein or Kim Jung-Il for having absurdly lavish lifestyles while their countries fell apart from lack of investment? I see little difference here. CEO’s “manage” their companies not for the long-term health of the company but the short term valuation of the stock, which is a huge chunk of their compensation. That is why during previous pre-meltdown economic hiccups they would rather lay off hundreds or thousands of employees rather than to take a periodic hit to the bottom line.

    • Pan_theFrog says:

      @NotChoinski:
      A simple solution: Execs can’t sell their stock until 5 years after they earned it. If the Board gives the CEO 20k shares in Jan 2008, then he (or his family) can sell them in Jan 2013. This should make the execs plan for the future of the company, and accept that sometimes they will lose a little this year, but make it back 5 fold over the next 3 years.

  7. johnfrombrooklyn says:

    Professional sports is not capitalism. Professional sports leagues are industries that have been given exemptions to anti-trust laws. If you and I and every Consumerist poster wanted to pool our money and start a MLB team called the Anchorage Moose Hunters we couldn’t do it. MLB, as an example, is an industry that has been able to grow its revenues greatly in the past 10 years while not allowing any new entrants into the industry. So don’t think that Jeter and A. Rod and Manny are the beneficiaries of pure capitalism. Hardly. They are beneficiaries of an industry that has been given specific government approval to erect impossibly high barrier to entry.

    • DeltaTee says:

      @johnfrombrooklyn: You are correct: the salaries paid to professional baseball players are kept artificially low because of an anti-trust exemption given to MLB. If there were multiple high-level baseball leagues, salaries would go up as the teams competed for the best talent. The teams have benefited by this exemption by not paying the players their true market value.

    • glater says:

      @johnfrombrooklyn:
      As an aside to this(and a few others who are talking about sports) i actually have less of a problem with some fairly high compensation for pro sports players. The leagues make *SO* much money *directly* off the backs of the players with ticket sales, broadcast rights, and merchandising and licensing fees, that I think it’s only fair that they give those guys a decent cut of it. The sports industry is pulling in billions with their names, likenesses and abilities, and to say “here’s your $40,000 a year” would be a total dick move.

      CEO’s aren’t the same thing. They’re grossly overcompensated administrators and talking heads for companies. They probably deserve more than the average employee, but not hundreds of millions. I like the idea from another comment: $250k a year, everything else in stock – payable 5 years after they leave the company. Heh heh.

  8. jsboehm79 says:

    Did he come out and say that the reason BofA beat Wall Street is because they charge enough in overdraft fees each year to buy a mid-sized nation?

  9. Pixelantes Anonymous says:

    I’d be fine with astronomical CEO compensation, if it really had something to do with talent or performance. But it doesn’t.

    They get paid $20M / year whether or not they bankrupt the company or not. And they will still get that golden parachute no matter how they perform.

    If I did as poorly as some of these fellas, I’d be in my boss’es office and out the door in a flash. And we wouldn’t be discussing severance packages.

    What the FS industry CEOs do when they’ve completely screwed up the company is they “re-negotiate” their compensation package to get rid of the performance based bonuses, and increase the salary and other benefits. When times are good, they increase the performance based bonuses. And no matter how they’ve done, they always get bigger golden parachutes.

    I can’t understand how the boards at these companies go for it, time and time again.

  10. Elcheecho says:

    Financial Sector CEOs==tulips

  11. frodo_35 says:

    We the people also hold blame in this. We have allowed these same scumbag ceos to fund the lobbyists that bribed our politicians who changed the laws that screwed the taxpayers. And I don’t know why we swallowed the fly perhaps we’ll die :)

  12. downwithmonstercable says:

    As much as BofA sucks, they’ve got their sh** together. US Bank is another that weathered the storm. Neither got involved in the subprime loans (and lost a lot of business in the short term) but it’s paying off now.

    If BofA would get rid of all those ridiculous fees…I’d defect to them in a second.

  13. andyfvp says:

    Give me a break. BoA was probably too big and cumbersome too take advantage of the ridiculous returns on offer with subprime mortgates. They still had expsoure and if it was such a bad idea, why did they buy the largest subprime broker – Countrywide way back in April. Everyone was greedy and while you cannot blame all the mess on Wall street (www.savingtoinvest.com), no one was innocent. If BoA was so good why is it share price down 50% and heavily supported by the government?

  14. azntg says:

    After watching the Jets lose on OT, I saw that 60 Minutes segment.

    The first thing that came up on my mind when Ken Lewis said about people being overpaid was: “So, everyone else was overpaid and you’re not overpaid yourself? Cut your own damn salary before you cut the livelihoods of your company’s staff first, jackass!”

  15. sonneillon says:

    It’s because the CEO’s are profiting from pain and not from running a successful business that most people have a problem with. If that is your problem then start a campaign to get congress to change the commerce laws to throw the CEO’s in jail for such mismanagement. If enough people agree eventually it’ll pass.

  16. Ein2015 says:

    Ben (or anybody): How much does Ken Lewis make?

  17. Hodo says:

    In 2007, Kenneth D. Lewis raked in $24,844,040 in total compensation according to the SEC.

    [www.aflcio.org]

  18. GinoBabakin says:

    I work for TDBanknorth and we survived. The bank chose not to get involved in the subprime mortgage business. Our CEO saw that in the long run it would not be good for overall business. We are conservative in our lending and only lend to people who can afford the amount they are borrowing.

    BTW – our CEO only makes $2M a year, which is still a lot, but I would say his talent and foresight is worth the compensation.

  19. WiglyWorm must cease and decist says:

    If by “gold era” he means “wild west”, then I whole heartedly agree.

  20. ALaterDayTD says:

    Good thing I have my money in Bank of America…

  21. Unnamed Source says:

    New law: bankrupt a company and all C-level executives forfeit all pay/salary/bonuses/parachutes/etc. above that of the lowest paid manager in the company.

  22. banmojo says:

    so much negativity against BoA here on consumerist. In my town BoA has brokered thousands of loans, home, business, and more, and done so with the highest of standards. they did not ‘weather the storm’ because of their size. it was because of their prior actions/decisions. they are NOT a bad bank, at least not in my neck of the woods. Kudos, BoA. Kudos. Oh, and thanks for the awesome interest rate on my first home purchase! You ROCK!!

    • mac-phisto says:

      @banmojo: the big problem that i see with bank of america is that they’re entirely acquisition driven. when the fun stops, they are going to have a hard time proving their worth – segregate out the m&a activities of the bank & the rest of their portfolio is not very impressive.

      hell, even with that activity, their ROA blows compared to most banks.

  23. NovaCosby says:

    All of us are at fault. Greed, got to have it now attitude, most do not want to work for it, many feel like it is owed to them. I really don’t care what the CEO’s make, I care about our government protecting people from being able to get loans that they can not afford, especially the ones that do not have the capacity and sense to calculate it themselves. Now us hard working people are having to pay for the poor ignorant people’s bad decisions to over spend. Live within your means people. Not everyone will have a big house and new cars.

  24. papahoth says:

    People seem to forget that this is shareholder money being spent like drunken sailors on liberty. The shareholders own the company. The CEO and the Board have a fiduciary responsibility to the shareholders. A resistant SEC under George Bush (and a Republican Congress before) has assured that this has not happened. They have used the companies as their personal money tree while in too many cases running the company into the ground.

  25. lyim says:

    Ken Lewis also doesn’t have a golden parachute, according to an article I read about the interview.

  26. fearuncertaintydoubt says:

    The analogy to sports analogies is apt. Salaries are pretty much set by the market for everything, janitors, cab drivers, accountants, ceos, whatever. The issue is the what are the market forces, and how are these different from the forces that drive the salaries for average folks.

    The SEC, in an attempt to bring more transparency and accountability to executive compensation, mandated that public companies disclose what their top executives make. The idea was to bring pressure on companies to not pay excessively, that the market would more efficiently set the prices for executives if everyone could see the prices.

    Well, it backfired—badly. Very much like professional sports figures (baseball most notoriously), Hollywood stars, and other high-profile, high-ego positions, CEO pay became the scorecard by which people could compare themselves and compete. So if so-and-so got $15m as CEO of BoA, then I want $20m to run WaMu. It’s an never-ending escalation because their fragile egos can’t handle “losing” now that they know what the salaries are. CEOs act more like celebrities than businessmen now.

  27. hi says:

    Charlotte-based Bank of America will receive $25 billion of the $125 billion the government is providing nine major U.S. banks.

    They beat nothing.

    [www.charlotteobserver.com]

  28. EdinaHumphrey says:

    I try to avoid Bank of America. But today I had to go in there to cash a check made out to me by a company that pays me as a consultant. The teller said that anyone who doesn’t have a BoA account now has to pay $6 to cash a BoA check (unless it’s a personal check). (Is this legal? The check is payable to me–how can they charge $6 if it is payable to me?)

    But what floored me was that she then asked me to put my *fingerprint* on the check–I had to do that before they would cash it (or all but $6 of it). No kidding–they now have little finger-sized ink pads at every teller station. I could tell she was embarrassed both by the fee and by the need to ask for a fingerprint.

    By the way, the tellers are now located in the basement. This is the Harvard Square, Cambridge Mass. branch, and the upstairs is all fancy and corporate-looking for the investor types, but if you want to get a check cashed, you have to go down in the basement, which feels more like the DMV or a social services office (which is only reinforced by the fingerprinting).

    Afterwards, I went over to my little local bank (Cambridge Trust) and told them the whole story. They were as appalled as I was. The teller there said, “What are banks coming to?”

  29. christopherscott says:

    In a democracy, it takes a country of fools to bring a foolish government or corporation into power. Governments and Corporations are no better than the people who elect and buy into them.

    The buck stops at the people, and in America, we are all a bunch of ‘bucking idiots.