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If a Senate amendment to the stimulus package holds on through the final version of the bill, all executives at companies collecting government TARP funds will see their pay limited to the United States President’s annual take of $400,000.
Not surprisingly, companies are in overdrive to try to kill the measure.
But does the President really only make $400,000? For sure he’s never going to reap the mega millions stock options can produce. And he does have the hardest job in the world. But according to one analysis of retirement benefits accorded the president, he is actually earning much more. Specifically another $1.5 million in future pension benefits on top of that base salary. (That’s something that would be included in the CEO compensation numbers that generally hit the press, the total compensation as reported in the annual proxy.)
That calculation divides the $6 million present value of his cost of living adjusted pension evenly over his four years in office. It also presumes he’ll retire at 51 and live 32 years after that. The numbers would change if he got re-elected.
There are other perks that any president gets in retirement as well including an office and staff for life. Details of these benefits can be found in this report by the Congressional Research Service. As reported in the CRS study, the office allowance varied significantly among former Presidents Carter, Bush, and Clinton, but the average amount spent on office, staff, and related expenses was about $592,000. These kinds of deals are rare in the corporate sphere these days compensation experts say (though they have appeared from time to time). They would be disclosed, but maybe not in that salary figure we all tend to use.
Does it matter if Obama earns $1.9 million in compensation or $400,000? Certainly those facing a major salary cut would say yes. Compensation consultants argue that any debate over the right level of executive compensation at financial institutions should use the most accurate facts. “When a proposed limit is on total compensation and a rationale for the limit is the President’s pay, it’s appropriate to look at the President’s total compensation, not just his salary,” says David E. Gordon, a member of compensation consulting firm Frederic W. Cook & Co., Inc.
It won’t be clear until sometime tomorrow probably whether this senate amendment proposed by Claire McCaskill (see her explaining it on Hardball) has survived the process of melding the House and Senate versions of the stimulus. McCaskill’s press secretary Maria Speiser says that while it’s still unclear what exact provision will be in place, there is expect to be some limitation on executive compensation included. “I think people are starting to get that this is an issue,” she says.
(Just for fun check out the wild differences in what the former presidents’ offices cost. Jimmy Carter’s annual rent is $102,000. Bill Clinton’s more than 5 times that. Clinton’s group also seems to talk on the phone a lot more. All in, Clinton’s annual cost is $1.2 million, Carter’s $518,000)
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