Over $3 Billion Paid By Largest 5 Wall Street Firms To CEOs The Past 5 Years

September 29, 2008 9:33 a.m. EST

Washington, D.C. (AHN) - As more Wall Street firms face distress and Congress tackles a $700 billion rescue package for ailing financial institutions, additional data about excessive chief executive officer pay is cropping up.

According to Bloomberg, Wall Street's five largest companies paid over $3 billion in the past five years to their high-ranking executives while they made decisions that included extension of loans instrumental to the collapse of many investment banking companies.

On top of the list is Merrill Lynch which paid CEO Stanley O'Neal $172 million from 2003 to 2007 and John Thain $86 million which included a signing bonus for working for Merrill since December. Before Bear Stearns collapsed, James Cayne received $161 million compensation.

The financial bailout proposed by U.S. Treasury Secretary Henry Paulson pushed for a cap on executive pay. The former Goldman Sachs Group CEO who got $111 million from 2003 to 2006, in a testimony to Congress last week, agreed to place a limit, although he initially opposed the idea.

Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, concurred with the idea. "Shareholders and boards should have done something about this a long time ago... They justified these levels of pay on the idea that they're all geniuses. I think that balloon has burst," Elson told Bloomberg.

The generosity of Wall Street firms prior to the financial crisis was not limited to CEOs. Goldman, Morgan Stanley, Merrill, Lehman Brothers Holdings and Bear Stearns compensated their 185,687 workers $66 billion in 2007, which included $39 billion bonuses. The fat pay boils down to $353,089 per employee and an average bonus of $211,849.

In his testimony before a House panel on Sept. 24, Paulson said, "The American people are angry about executive compensation, and rightfully so... We must find a way to address this in the legislation, but without undermining the effectiveness of this program."

Compensation consultant James Reda said it was unlikely legislators will include mandatory caps on CEO compensation in other industries. "Congress should nudge the free market, not bludgeon it," Reda told USA Today.