AFL-CIO talking to lawmakers on Capitol Hill; among other things, union wants more corporate disclosure about executive pay
The subprime crisis was caused in part by the executive compensation structures at banks, according to AFL-CIO officials, who say additional legislation in the fall may propose new strictures on executive pay. In remarks to reporters today, Richard Trumka, the union’s secretary-treasurer, said performance measures at financial services firms such as Washington Mutual and Citigroup did not penalize top executives for the risk they took and excluded metrics such as loan-loss reserves and expenses related to the foreclosure of real estate assets. “When the house of cards fell, they didn’t pay for it. We did.”
The AFL-CIO said that compensation structures should not just include return on equity and revenue growth as the main units of measure. The repeal of the Glass-Steagall Act—which removed decades-old barriers to commercial and investment banking—coupled with lax board oversight of executive compensation, led to a “financial meltdown” in the markets, Mr. Trumka said.
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