Executive Pay Hysteria Spreads Beyond Wall Street

golden parachute bonus

The uproar about big pay and little accountability for Wall Street’s executives is starting to spill over into other areas of the economy — particular when it involves companies that draw big dollars from the taxpayer.

Wall Street Journal reports that government contractors — especially in Medicare and defence — are drawing increased scrutiny from federal auditors for their executive compensation using taxpayer dollars:

Medicare and defence contractors, which provide services to the government, are reimbursed for labour and benefits, including a portion of executive pay. Under law, contractors can seek reimbursement for $684,181 in pay for each top officer per year, up from $250,000 when the cap was implemented in 1995.

But auditors say some contractors have been billing the government for pay amounts that exceed the cap. How widespread the problem is and how much money is involved isn’t clear, since audit reports are confidential and auditors rarely focused on executive pay in the past. 

The Journal calls out KBR and BlueCross BlueShield of South Carolina as examples of overbilling. Here’s a graphic of the Medicare case:

wsj contractor chart

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