U.S. Chamber Supports Unlimited CEO Pay For Failing Companies

The U.S. Chamber works tirelessly on behalf of the CEOs of big banks and insurance companies to thwart limits on executive pay. The Chamber's campaign to enrich failed CEOs at the expense of their corporations and shareholders flies in the face of overwhelming investor and public support for scaling back executive paychecks.

The priorities of the U.S. Chamber are clear:  Protect the prerogatives and paychecks of the corporate giants who write the dues checks to the U.S. Chamber, even when the companies they run perform poorly and require taxpayer bailouts. 

When the Obama administration’s pay czar Kenneth Feinberg ordered such limits at firms bailed out by the federal government, an ABC/Washington Post poll found 71 percent of the public endorsed the move, with 58 percent strongly in support.

Yet in the summer of 2009, when the House considered legislation that would give shareholders an advisory vote on executive pay and eliminate the perverse incentives in compensation practices that led to the financial crisis, U.S. Chamber lobbyists attacked the measure as an “unprecedented governmental intrusion into matters that have historically been addressed by private actors.”

U.S. Chamber CEO Tom Donohue has a long history of defending CEOs whose financial shenanigans inflate corporate earnings and their own compensation.

• After Hank Greenberg resigned as AIG chairman and CEO amid a 2005 investigation into the company’s accounting practices, Donohue said  prosecutors risked “‘killing the goose that laid the golden egg’ by taking executives to task for accounting methods that are a ‘series of guidelines.’” Greenberg eventually paid $15 million to settle SEC charges he engaged in sham transactions to hide AIG’s underwriting losses and it was later learned his foundation contributed $19 million to the U.S. Chamber.
• Donohue sat on the Qwest Communications board compensation committee that awarded CEO Joe Nacchio 7.25 million stock options worth $77 million in 2001, one of the worst years in the company’s history.  Nacchio is now serving six years in a federal prison for insider trading. He faces a separate SEC charge that he orchestrated a massive $3 billion fraud at Qwest between June 1999 and March 2002.
• Donohue chaired the compensation committee at Sunrise Senior Living that gave CEO Paul Klaassen millions of stock options between 1996 and 2005. The company subsequently admitted it had inflated earnings by 94% through improper accounting. A separate Sunrise shareholders lawsuit accused Donohue of accepting backdated stock options from the firm while he served on the compensation committee.
• Donohue chaired the Union Pacific compensation committee that counted as earnings the proceeds from an initial stock offering for the spinoff of Overnite Transportation, which triggered an $8 million payout to UP’s CEO.
• Donohue served on the XM Satellite Radio compensation committee that awarded backdated stock options to its executives.

While Donohue was lining the pockets of executives from his perch on boardroom compensation committees, the U.S. Chamber opposed countless efforts to rein in abusive awards.

• The U.S. Chamber “strongly opposed” the Financial Accounting Standards Board rules requiring mandatory expensing of stock options, which would reduce reported earnings. The U.S. Chamber submitted a position paper to the SEC arguing that expensing options was “improper accounting.”
• The U.S. Chamber opposed the SEC’s 2006 proposal that would make companies report a single figure for executives’ total pay, including the fair value of stock options. The U.S. Chamber argued the single line item would “provide a false impression of total compensation.”
• Donohue told the press in early 2010 that the mathematical brilliance of the executives who concocted the toxic mortgage securities and complex derivatives at the root of the crisis justified their outsized pay packages. “They are like mad scientists,” he said.

Warren Buffett called them “madmen,” too. Only his characterization came in 2003, and was part of a prescient warning that the big banks and insurance companies’ newly concocted derivatives were the “financial weapons of mass destruction” they turned out to be.

The priorities of the U.S. Chamber are clear:  Protect the prerogatives and paychecks of the corporate giants who write the dues checks to the U.S. Chamber, even when the companies they run perform poorly and require taxpayer bailouts.