Heads I win. Tails I win.
In good times, CEOs of financial companies can reap big bonuses just for swimming along with the pack. And in bad times (like now), CEOs get big bonuses for handling the crisis.
At least that’s the justification at Legg Mason (LM), which is paying its CEO Mark Fetting over $3 million this year.
Mr. Fetting’s leadership of the company during one of the worst financial crises of the last 100 years, which particularly affected financial services companies
Hilariously, the company had to bend its existing compensation rules
Equally interesting is that while the board set Fetting’s bonus at 21% of the bonus pool in June 2008, Legg Mason’s loss of $1.9 billion last year meant that there was no bonus pool. But that didn’t stop the bonus because as the comp committee writes in the proxy the net loss was due to just two items and without those two items, the company “would have had net income, and the plan would have produced a total bonus pool large enough to accommodate the annual incentive awards made. Although the terms of the plan do not explicitly provide for the exclusion of those items, the Committee considered the items to be extraordinary expense.”
All those damn charges… like the ones taken at basically every single other financial company for the past year.
Where’s the compensation czar?
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