Golden parachutes provide income when the executive leaves the company before the end of a specific period of time and – in the Financial Times – Ben McLannahan reports on top banking executives pocketing millions of dollars before taking jobs in government:
“Critics argue that such benefits, which do not apply to people quitting for other jobs in the private sector, have ensured a succession of financial insiders in senior policy positions and deferential treatment towards Wall Street”.
The revolving door
Citi is among a handful of big banks allowing government-bound staff to cash out of incentive programmes by accelerating the vesting of their stock awards. Citi has been a particularly rich source of state appointees in recent years, from Jack Lew, the Treasury Secretary, to Stanley Fischer, vice-chairman of the Federal Reserve. The latest to move was that of Antonio Weiss, a former banker now serving as a counsellor to Mr Lew, who acknowledged December that he would leave Lazard with up to $21m in unvested income and deferred compensation.
AFL-CIO, America’s biggest trade union federation which manages $94bn in assets, will begin a campaign against this practice at Citigroup’s annual shareholder meeting on Tuesday and put similar proposals to the shareholder meetings of Goldman Sachs, Morgan Stanley and JPMorgan Chase in coming weeks.
67.9% of those who voted in Switzerland’s referendum seeking constitutional limits on remuneration came out in favour of the initiative, which was passed in every canton. Swiss Justice and Police Minister Simonetta Sommaruga told reporters that the result was “the expression of widespread unease in the Swiss population about the level of salaries paid to top managers.” There is also widespread unease in the British population about such matters.
The Golden Parachute ban on excessive executive salaries and other means of compensation passed into Swiss law in 2014 but some parts only come into force this year, including the binding shareholder vote on remuneration.
Or will we need a Thomas Minder (above right) to come to the rescue?
This link was sent by a reader with the comment “Stupefait!“
The government has announced that Goldman Sachs, which has ‘sparked a great deal of controversy over its alleged improper practices’ – especially since the 2007 and ongoing financial crisis – and UBS, fined £940m for its role in the Libor rate rigging scandal – are to be the global co-ordinators and bookrunners of the Royal Mail privatisation.
The department for business, innovation and skills (BIS), which is in charge of the sale, refused to say how much the banks will collect in fees, but they will collect 1% of the flotation value.
A BIS spokesman declined to comment on the banks’ roles in recent scandals.