In a provocative article from Associated Press writer Rachel Beck, she argues that Wall Street CEOs should return some or all of their huge paydays that occurred as America was led into the current financial crisis:

If Wall Street CEOs really want to revive their credibility, they should return the bloated bonuses they got when they made what eventually turned into wrongheaded bets on the mortgage market.

We all know how that outsized risk-taking ultimately backfired for their firms. Record profits have turned into massive losses as financial companies worldwide have taken some $250 billion in write-downs due to their free-falling credit-related assets.

Yet the CEOs still are clinging to the compensation they made from busted business models. And not just bonuses from 2008, when the subprime mortgage meltdown and the credit crisis became more acute, but also those from the last few years that were "earned" when profits were soaring.

That's what they should be giving back to shareholders. It would be a genius public relations move.

Jack Welch, in a column co-authored with his wife Suzy for The Times of South Africa, unsurprisingly defended executive compensation being set by the free market. In case you don’t remember, Jack Welch is the former CEO of General Electric Co. (NYSE: GE) who was paid handsomely for his work, including a package for his retirement of (as quoted in yesterday’s post):

An annual retainer of $86,000 and perks that included sports tickets, use of company aircraft and an $11 million Manhattan apartment, bodyguards and other things that the U.S. Securities and Exchange Commission later valued at about $2.5 million annually. 

In the column, Welch argues:

We think the debate over executive compensation is exactly as it appears — a philosophical divide. There are those who believe that many CEOs just make too much money compared with average workers and their relative value to the organisation, and that someone — be it the shareholders themselves or government regulators — must close that gap. Outsized CEO compensation, this group generally believes, is bad for society and morally wrong. Then, there are people who generally don’t say what they believe, because it’s so politically incorrect. But allow us to step in, because we share their view. Yes, most CEOs make a ton of money, and sometimes they make too much. But in the market economy, salaries are set by supply and demand. The companies that field the best teams win and, because of global competition, the best teams tend to be expensive.

Albany’s Times Union writer Marlene Kennedy decries Grasso’s victory last week – not on legal merits or out of a sense of outrage, but because it “denies us a rich spectacle:”

I had been looking forward to daily, nonstop TV coverage of the trial -- think O.J. Simpson, but for the Wall Street set [of the late 90’s]…

You remember the period: The bull market was beginning to roar and the titans of industry were amassing hefty compensation packages. Jack Welch left General Electric Co. (NYSE: GE) in 2002 with an annual retainer of $86,000 and, it turned out, perks that included sports tickets, use of company aircraft and an $11 million Manhattan apartment, bodyguards and other things that the U.S. Securities and Exchange Commission later valued at about $2.5 million annually.

The disclosures mightily embarrassed the company, and Welch subsequently gave back much of the package.

There were the shenanigans of former Tyco (NYSE: TYC) chief Dennis Kozlowski (of the $6,000 shower curtain fame) and HealthSouth's Richard Scrushy (found guilty of bribing the governor of Alabama) and WorldCom's Bernard Ebbers (accounting fraud and conspiracy), and the late Kenneth Lay of Enron (deceiving company employees and shareholders).

In a thoughtful though not necessarily convincing piece from The Motley Fool, Dick Grasso's pay while at the NYSE is defended based on the length of his tenure and the success of the exchange during his leadership (as well as other, more obscene pay packages):

If you've worked at the world's largest and best-known stock exchange for 35 years -- during eight of which you were the CEO, including after 9/11, when you provided unparalleled leadership -- you think you'd be entitled to end your tenure nicely compensated for a job well done.

Here's what's important in Grasso's case:

• The NYSE was a private organization when the dispute arose.
• Grasso had been CEO for eight years before he left, during which time the NYSE earned more than $900 million.

Heck, if Grasso ran a hedge fund, he'd practically be eligible for food stamps [given his paltry $190 million payday]. His retirement package is equivalent to what hedge-fund manger John Paulson made every two and a half weeks last year. Grasso worked hard. He benefited the company. He deserves his pay.

After four of the six charges against former NYSE Chairman Dick Grasso were thrown-out by the New York Supreme Court, yesterday the remaining two were also dismissed by an appeals court.

As The Washington Post reports, "New York Attorney General Andrew M. Cuomo yesterday dropped his case challenging the nearly $190 million compensation package of former New York Stock Exchange chairman Dick Grasso, hours after a state appeals court dismissed the two remaining claims.

Cuomo's decision not to proceed marked the end of a high-profile attempt by state regulators to reel in big-ticket executive payouts. Grasso's compensation, which included an immediate lump-sum payment of $139.5 million in 2003 and an additional $48 million payable over four years was challenged by state prosecutors as excessive and in violation of state law."

The nation's most popular newspaper by circulation, The USA TODAY, features an article on the highly charged political environment in Europe surrounding excessive, American-style CEO pay:

Luxembourg Prime Minister Jean-Claude Juncker, who chairs meetings of eurozone finance ministers, has called rising corporate pay a "social scourge" and wants higher taxes on what he calls "golden goodbyes." Fifteen nations use the euro as their currency.

French President Nicolas Sarkozy is urging debate on European-wide pay limits when France takes over the European Union's rotating executive presidency Tuesday.

Behind the threats is growing public and shareholder ire with multimillion-dollar compensation packages that are starting to rival American CEO pay at the same time European economies and financial markets are sagging.

CEOs in Europe have traditionally earned less than their U.S. counterparts, says Vicente Cuñat, who analyzes CEO compensation at the London School of Economics. But in the past 15 years, he says, "Europe is catching up."

As in the USA, Guay says, CEO pay becomes a hot-button issue when the economy isn't doing well. It cools when times get better. Over time, he says, public outcries have rarely had a big effect on either side of the Atlantic. "It really hasn't altered the path of pay over the last 15 years," Guay says. "We still see pay rising. I think it will continue."

A The Motley Fool article points out American Axle & Manufacturing's (NYSE: AXL) hypocrisy in pushing huge pay cuts on workers while giving management huge bonuses, not to mention these bonuses may have been partially bankrolled by General Motors (NYSE: GM):

American Axle & Manufacturing ended a strike by persuading workers to accept a contract that includes significant pay cuts. A month later, management announced its decision to give bonuses to executives, including a multimillion-dollar award for the CEO.

The parts supplier whose strike caused its largest customer, General Motors, to idle around 30 plants because of parts shortages, filed a notice with the SEC on Friday that it had granted lavish bonuses to its top executives, including $8.5 million for CEO Richard Dauch.

In contrast, the contract the workers got stuck with includes cuts that slashed most of their wages from $28 an hour to somewhere between $14.35 to $18.50. One of the primary reasons the deal got done was because GM kicked in $18 million on top of the $200 million it was contributing for buyouts and such.

From the Centre Daily Times, on The Conference Board's look at 2007 executive compensation:

According to The Conference Board study, the utilities industry and the food and tobacco industry top the list of median CEO compensation. The highest median CEO total compensation was $3.9 million for the utilities industry and $3.8 million for the food and tobacco industry. Because of the broad-brush classification that includes many smaller "commercial banks" along with the larger banks and "nonbanking financial services" companies, the ranking of financial services is at the bottom of the median CEO compensation list with $734,000. While on average larger companies pay higher salaries, the fraction of total compensation that is delivered by base salary is lower as companies get larger. The smallest 10 percent of companies deliver 57 percent of their total compensation in salary, whereas the largest 10 percent of companies deliver only 12.5 percent as salary.