Does the President Really Make Just $400,000 a Year?

Posted by: Nanette Byrnes on February 11, 2009

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)

Reader Comments

There's More

February 12, 2009 7:52 AM

But wait - there is far more compensation. The Pres gets free housing (at the WH and Camp David), what is the value of that? Probably hundreds of thousands/year. Also, like Daschle, he gets free transportation. He has unlimited access to a limo, a jet and a helicopter - so does his family. Not suggesting any of this is not necessary, but essentially, he has no expenses to cover with that $400k - other than overpriced private school tuition! SO to compare the Pres $400k to anyone in the private sector at $500k is meaningless.

Steve G

February 12, 2009 11:37 AM

It's irrelevant what the POTUS makes when considering the limits on what bank executives make, who have damaged their companies and shareholder values and received government assistance. I don't see the connection. It's meaningless regardless of what he make.

A Lot More

February 12, 2009 1:50 PM

In addition to the houses, he does not need to pay for food, utilities, gasoline, house/auto insurance, repair & maintenance. Most of his $400,000 will go directly to savings, unlike everyday Joe like us who have to pay for everything with our salaries.

terrence

February 12, 2009 1:51 PM

A lot of those financial executives have been living large for quite awhile. They want to hang onto their salaries and bonuses because otherwise they can't make their payments. Welcome to real life.

Hugo van Randwyck

February 12, 2009 2:56 PM

I'm pleased to hear that people receiving bailouts may have salaries no higher than the President, i've been suggesting it - like a broken record! - for months. Maybe there are politicians in Washington who read these comments :)I would go further, go more pro-active. Any bank which is put on 'watch' by the Fed, also has it's top pay capped at $400,000. If after 6 months it still isn't run properly then reduced to VPs salary $221,100. Ask someone who's just lost their job, if they prefer reactive to pro-active bank supervision.

cl

February 12, 2009 3:28 PM

Yes, but the president is running the United States of America, and these CEO or running just one company compare to a whole country and they can't get that right, and most ceo are born with a silver spoon anyway and don't know how a normal person life is, so let look at the whole picture ok.

Liberal

February 16, 2009 10:15 AM

The CEO of a company, even in the third world, does not have to deal with nuclear proliferation, disease, famine, security of nearly 350 Million Americans along with several million abroad, has to deal with commerces, land use, taxes, congress, and so many other things. Yes, so does a CEO, but not all CEO's do their jobs. They delegate. The president delegates too, but there is something to be said when you are accountable and are limited to 8 years in the office. Some CEO's make more money then the prez, in one year even after destroying the companies financials and demand that they are compensated. That is absolutely ridiculous. They can stay with their company for a very long time and get even more benefits. A 20 million dollar package is significantly greater than the 1.5 Million dollar package and an office staff. One, it is paying the office staff who creates jobs, here the CEO's get all the money, while trying to hire illegals to do their basic necessities of lawn work, housekeeping and driving so they can reap the benefits.

Gregory Deming

February 26, 2009 7:26 PM

Isn't there a hidden income? Don't politicians get to keep unspent campaign funds? I think CEO's should be capped at a multiple of the average wage of their employees. Maybe 15 or 20 times?

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January 23, 2010 7:44 AM

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