Count me among the working stiffs underwhelmed by the restraint America's financial kings have shown only a few months after the federal government had to step in with capital and blanket guarantees to save the system from collapse.
In recent weeks, we've been treated to stories about seven-figure bonuses at Merrill Lynch, AIG, Goldman Sachs, Citigroup and other firms where the executive classes made out as their firms collapsed or were saved thanks to taxpayer largesse.
Meanwhile, the productivity of U.S. workers grew in the second quarter at the fastest pace in almost six years as employers slashed payrolls to bolster profits, according to government statistics. Productivity, a measure of how much an employee produces for each hour worked, rose at an annual 6.4 percent pace.
Labor costs fell by the most in eight years.
Great. There are fewer bank tellers, assembly line workers and carpenters, and the survivors are working longer hours for less.
Meanwhile, some of the captains of the financial world and their boards of directors have figured out ways to get around the government's loophole-riddled rules for companies that got government capital last fall.
And it's not just grumpy neighbors or $40,000-a-year customer-service agents or laid-off workers calling in to complain.
"Workers are angry because they see executives walking off with millions and destroying the workers' financial security," said Jim Mitchell, the retired CEO who for 15 years ran IDS Life, now part of Ameriprise Financial Inc. "They screwed up the system. The public has lost trust in business. That's not good."
Mitchell, citing a recent article in Fortune magazine -- not exactly a left-wing journal -- is aghast at some of what he has seen from his perch over the last decade as a fellow at the Center for Ethical Business Cultures at the University of St. Thomas.
Mitchell doesn't have a problem with executives who make millions in cash-and-stock compensation as long as their companies do right by lesser-paid employees and long-term stockholders. Still, this is not the year for anybody, whether the brass at Goldman Sachs or Wells Fargo, to be slopping at the trough.
How about a little solidarity?
Please call me if you can find a big-company CEO who has announced he's taking a pay cut to reflect a sharp decline in the value of his stock, the case at most financial institutions, and will accept no stock or related bonuses until the company turns around.
In short, how about a little solidarity with the line workers? The ones who dealt with panicked customers last fall and are trying to rewrite mortgages that never should have been made in the first place.
Last week, Wells Fargo's board increased the annual compensation for CEO John Stumpf and three other executives in the form of millions in restricted stock. The San Francisco bank-based financial conglomerate said the stock can't be sold until the $25 billion it received last fall from the U.S. Treasury is repaid.
It's tough all over.
Wells Fargo is reporting higher revenue and profits this year largely because of its acquisition of weakened Wachovia Corp. last December. Stumpf, a Minnesota farm boy who made good, has a big job at the huge banking industry survivor.
Still, both companies are tainted by the subprime mortgage scandal that wreaked havoc from Main Street to Wall Street. And investors and depositors were running scared last fall until the regulators stepped in to prove that some financial industry titans are just too big to fail.
For its part, Wells Fargo says its executive compensation is in line with other successful financial organizations.
"We believe that these increases in compensation adhere to both the letter and spirit of the new executive compensation rules that apply to companies that received a U.S. Treasury investment," said Steve Sanger, the former General Mills CEO who sits on Wells Fargo's board and chairs its compensation committee.
Wells Fargo, better run than Wachovia and some of the other big-bank basket cases, will survive. Or at least now it's too big to fail.
However, some analysts remain concerned about the risk Wells Fargo assumed with its purchase of Wachovia and its exposure to subprime mortgages and commercial real estate.
Bottom line? This was not the year for the board to be passing out any kind of compensation increases at the top.
Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com
