Executive pay in Wall Street

NYT has this excellent graphic of executive pay (base salary + bonuses + realized share options + payouts and other compensation) in the major Wall Street firms. Two things stand out from the stats
1. The major share of total take home compensation for most CEOs came from realized share options.
2. Goldman Sachs, Citigroup and Bear Stearns appears to have paid major share of compensation in the form of bonuses. But the mixed fates of these three means that even this model for executive pay is questionable.

Richard S Fuld, the CEO of the failed Lehman Brothers took home nearly $500 million in salary and bonus payments in the last eight years, and Lehman is now under investigation for last minute handouts to executives before its bankruptcy filing.

Update 1
Here is more on executive spending practices at AIG, a week after government extended it a $85bn lifeline.

Update 2
NYT described it appropriately in an article, "On Wall Street, Bonuses, Not Profits, Were Real". Bonuses had come to dwarf the salaries, distorting incetives in many ways. Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.

Describing this trend as the "Madoff Economy", Paul Krugman writes, "In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse."

Update 3
More proposals on executive compensation reforms here.