The latest information on CEO salariefs from the AFL-CIO shows that even as the subprime mortgage crisis has led to soaring numbers of home foreclosures, top executives at the financial companies that helped created the crisis continue to earn outrageous salaries.

"When CEOs are paid obscene amounts to make bad decisions, it hurts average Americans who hold mortgages, have bank accounts and who are invested, such as through their pensions," said AFL-CIO secretary-treasurer Richard Trumka in announcing the latest version of the federation's Executive PayWatch Web site. The site features seven case studies that show how compensation packages create incentives for CEOs to gamble on risky ventures in hopes they will lead to short-term increases in stock prices, but at the expense of the long-term future of their companies and shareholders. It also includes a comprehensive database of new CEO pay figures.

The case study of Bear Stearns shows how CEO James Cayne received a $17 million bonus, $14.8 million in restricted stock, $1.7 million in stock options and more than $6.1 million in other compensation. In March, Bear Stearns narrowly avoided bankruptcy, only to be bought for a fraction of its previous stock market price.

Then there's the case of Countrywide Financial Corp., which shows how executives at the mortgage lender got stock options that rewarded them for short-term stock performance even while they pushed lending practices that were not sustainable over the long run. During the height of the real estate bubble between 2004 and 2007, chairman and CEO Angelo Mozilo cashed in on these short-term gains by exercising stock options valued at $414 million. As a result, he had already pocketed a tidy profit by the time the long-term consequences of his decisions finally caught up with the company's share price.

This year's PayWatch also helps workers and homeowners make their voices heard on this issue. The site provides a letter that visitors to the Web site can send to their representatives in Congress calling for them to support legislation that includes:

• An immediate short-term moratorium on home foreclosures.
• A conversion of the low, "teaser" interest rates on home loans to the standard 30-year fixed mortgage.
• Expanding Chapter 13 bankruptcy court protection to enable homeowners to shield their primary residences from foreclosures.

"If the government can see the need to buttress the financial system by facilitating and insuring a transaction between large corporations, as it did earlier this year when J.P. Morgan purchased Bear Stearns, surely lawmakers can enact legislation to help the millions of homeowners who are suffering the most from the collapse of the housing market," the letter says.

The AFL-CIO launched the Executive PayWatch website in 1997 to draw attention to runaway CEO pay packages and the widening gap between the compensation of corporate chiefs and workers. In 1980, CEOs of large U.S. companies made 42 times the wages of the average worker; by 2006 the gap had widened to more than 364 times. [AFL-CIO press release]

April 15, 2008