Top AFL-CIO Official Lobbies for Ban on Golden Parachutes for Bank Executives who Take Government Jobs
A top AFL-CIO official, Director of Investment Brandon Rees, lobbied for – and got 40 percent of the vote for – a ban on multimillion dollar “golden parachutes” for investment bank executives who quit to go to work for financial regulators.
Rees’ lobbied at the annual meeting of shareholders at the investment house Lazard Freres, held at a swanky hotel in Bermuda. It’s the latest move in the fed’s long campaign to hold financiers and corporate chieftains accountable for their actions. Inequality.org, which originates Sam Pizzigati’s column on wealth and inequity, interviewed Rees.
Lazard’s headquarters are in New York City, but it’s incorporated in Bermuda, a tax haven, Inequality notes.
“Like a tax shelter that lacks economic substance, Lazard’s shareholder meeting seemed empty of meaningful content. There was no discussion of the company’s performance, as is customary at other shareholder meetings. I felt like the only attendee who was not affiliated with the company,” Rees told the website.
Rees presented the federation’s proposal after the regular business of the meeting lasted less than five minutes. The fed wanted to force banking executives to forfeit “unvested equity” if they left for government service.
The unvested equity – stock and stock options – are usually worth millions of dollars to each departing honcho.
“Paying executives to enter government service fosters a ‘revolving door’ between Wall Street and financial regulators. Government service certainly rates as commendable, but financial regulators should be free from any perceived bias due to extra compensation received from their previous employers,” Rees explained.
“As Sheila Bair, the former chair of the Federal Deposit Insurance Corporation, has put it, ‘Only in the Wonderland of Wall Street logic could one argue that this looks like anything other than a bribe...We want people entering public service because they want to serve the public. Frankly, if they need a [golden parachute], I’d rather they stay away.’”
Besides his own lobbying, Rees presented a 44,000-person petition for the proposal. The fed has identical shareholder proposals pending against golden parachutes at Morgan Stanley, JPMorgan, Citigroup, and Goldman Sachs.
The Lazard Freres board opposed the AFL-CIO’s shareholder proposal. It stated that “Lazard fosters a strong culture of public service.” “But when it comes to paying income taxes in the United States, the company seems to be less civic-minded. Lazard incorporated itself in Bermuda in 2004,” Rees drolly commented. And he noted that while more than 40 percent of the firm’s shareholders supported the AFL-CIO’s ban on bonuses, their votes do not bind the board.
