With the eyes of Wall Street – and a good part of Main Street – upon them, three former financial titans of America were obliged yesterday to defend before Congress the exorbitant pay packages they received even as they each lost their jobs in the tsunami wave of housing-credit writedowns and losses.
On the hot seat before the House Committee on Oversight and Investigations were Stanley O'Neal, Charles Prince and Angelo Mozilo, respectively the former heads of Merrill Lynch, Citigroup and Countrywide Financial before being swept off their perches by the ongoing credit crisis.
To what end the hearings were instigated was not clear, save for the opportunity for committee members to tap into widespread disgust with the dollar-amounts being doled out to chief executives at a time of galloping foreclosure rates and economic pain for ordinary citizens.
"There seem to be two economic realities," said Representative Henry Waxman, Democrat of California. "Most Americans live in a world where economic security is precarious and there are real economic consequences for failure. But our nation's top executives seem to live by a different set of rules."
The day was potentially least comfortable for Mr Mozilo, who has pocketed $410m (£204m) since becoming CEO of Countrywide nine years ago. Severely wounded by the credit crisis, the company is passing under control of the Bank of America. But Mr Mozilo is leaving a well-compensated man. He nonetheless complained about "exaggerated reports of my severance," adding that "I am receiving no severance or change of control package whatsoever." In fact, he agreed to forego severance benefits in January upon hearing that he was to appear before the Congressional panel. Any money he did take with him, he added, "were earned over a 40-year period of service".
In his opening remarks, Mr O'Neal highlighted the poverty he experienced growing up. "Whatever I achieved in life has been a unique combination of luck, hard work and the unique opportunities I have had that only could have happened in this country," he said. He said that the financial services industry "has a long history of paying many individuals highly, not just senior executives," and stressed, as did his peers, that payments for him were approved by his bank's board of directors "upon the recommendation of the compensation committee".
Mr O'Neal told the panel also that he had received no severance pay upon standing down late last year, nor any bonus for 2007.
Goldman presidents paid $67.5m
Goldman Sachs co-presidents Gary Cohn and Jon Winkelried were each paid $67.5m (£33.5m) last year, the investment bank said, almost equalling the record compensation package awarded to its chief executive Lloyd Blankfein.
Goldman said in December that it had paid Mr Blankfein $68.5m for 2007, a new Wall Street high, but a filing to the Securities and Exchange Commission (SEC) revealed other executives at the bank fared almost as well. The chief financial officer David Viniar received $57.5m, while the investment management head Edward Forst got $44m.
All the packages comprised a combination of basic salaries, cash bonuses, stocks and stock options. However, Goldman's SEC return also revealed details of the stock vested by Mr Blankfein last year, which realised proceeds of around $46m. That took his total compensation close to $100m.
Goldman's profits last year rose 22 per cent to $11.6bn, as it mostly avoided the sub-prime crisis. The bank said: "Our financial performance was very strong relative to our core competitor group."