Starting Public-Sector Jobs With Parting Gifts in Hand
Tuesday, February 10, 2009
As part of his battle against excessive pay packages, President Obama has taken aim at golden parachutes -- those hefty lump sums that top executives cart away when they leave a job. But the practice is so entrenched that many of the president's own top recruits for White House positions are receiving generous severance packages from their previous employers.
While the lump sums pale in comparison to the startling amounts awarded to Wall Street executives in recent years, the payouts highlight the pervasiveness of the practice and further illustrate the growing pay disparity between ordinary citizens and the nation's elite.
Consider the new chairman of the Securities and Exchange Commission. Mary L. Schapiro reported that she is getting a lump-sum payment of $5 million to $25 million from the Financial Industry Regulatory Authority, the brokerage industry's self-regulating body she headed before joining the SEC last month. An SEC spokesman Friday said the package was worth $7.2 million.
The payment comes from FINRA's defined-benefit plans, according to financial disclosure statements, which only lists assets in ranges. Schapiro has worked for FINRA and its predecessor organization, National Association of Securities Dealers, since 1996.
She also reported a payout of $675,033 in deferred compensation from Kraft Foods, where she served on the board of directors. She was also paid deferred compensation from Duke Energy, in cash and stock, valued at $750,000 to $1.5 million.
President Obama's pick for Treasury secretary, Timothy F. Geithner, has disclosed a $434,668 severance from the Federal Reserve Bank of New York. Geithner, who worked overtime last year negotiating lifelines for storied Wall Street firms as the credit crisis deepened, will also get $50,000 to $100,000 in unused vacation time and comp days.
According to an official at the New York Fed, Geithner's severance is from a supplementary retirement plan that would have begun paying out when Geithner turned 55. Geithner is 47, and the board decided to give him the cash equivalent, the official said.
Executive compensation, including severance packages, has received greater scrutiny in Congress and on Main Street as the pay gap between average workers and top corporate officers widened in recent years. But now, public outrage with many executives has reached a boiling point as top officials at institutions receiving taxpayer bailout funds have continued to receive large packages despite tumbling shares.
There is a difference, however, between White House employees and corporate titans. Unlike the top executives who take their goodbye packages and immediately sign on to other high-paying corporate posts, the presidential appointees are taking significant pay cuts to join the federal government.
Schapiro, who received $2.8 million in salary and incentive compensation last year from FINRA, will make $162,900 this year as SEC chairman.
Even Geithner, who is going from one government job to another, will take a pay cut. He earned $411,200 as president and chief executive of the New York Fed, and he will take home $196,700 as head of Treasury.
A cadre of lawyers will also see their seven-figure incomes dwindle. But their lump-sum payments should soften the blow.