For release Wednesday, August 31, 2016 at 7:30 PM

This new study focuses on a 1993 Clinton administration reform that was intended to rein in runaway CEO pay by capping the tax deductibility of executive compensation at $1 million. But the new rule included a huge loophole for stock options and other “performance” pay. As a result, the more corporations hand out in executive bonuses, the lower their tax bill. This perverse incentive for excessive compensation has been a major factor in the explosion of CEO pay. Hillary Clinton has said she wants to “reform” this loophole, but hasn’t explicitly called for closing it.

The financial bailout program closed this loophole for recipients, but only until they repaid their public funds. While homeowners and shareholders were still suffering from the crisis, banks began doling out massive stock-based awards that quickly ballooned in value, giving the banks huge tax write-offs and leaving ordinary taxpayers to make up the difference.

“Taxpayers should not have to subsidize excessive CEO bonuses at any corporation,” notes report author Sarah Anderson. “But such subsidies are particularly troubling when they prop up a pay system that encourages the reckless behavior which caused one devastating national crisis — and could cause more in the future.”

This 23rd edition of the annual IPS Executive Excess series includes the most comprehensive available catalog of CEO pay reforms, including proposed legislation to eliminate the CEO bonus loophole.


  • The top 20 U.S. banks paid out more than $2 billion in fully deductible performance bonuses to their top five executives over the past four years. At a 35 percent corporate tax rate, this translates into a taxpayer subsidy worth more than $725 million, or $1.7 million per executive per year.
  • Wells Fargo CEO John Stumpf received the largest amount of such bonuses. Between 2012 and 2015, years in which his bank faced $10.4 billion in misconduct penalties, Stumpf pocketed more than $155 million in fully deductible performance pay. This works out to $54 million in tax subsidies for Wells Fargo — just for one man’s bonuses.
  • Between 2010 and 2015, the top executives at the 20 largest banks pocketed nearly $800 million in stock-based “performance” pay— before their firm’s stock had returned to pre-crisis levels. With shareholders who had held on to their stock still in the red, executives were reaping massive bonuses that their banks could then deduct off their taxes.


  • JPMorgan Chase CEO Jamie Dimon cashed in $23 million in stock at the peak of the foreclosure crisis in 2010, when the firm’s stock was trading around 15 percent lower than at the beginning of the market slide. Since then, the bank has racked up more than $28 billion in mortgage and other financial misconduct settlement fees.
  • Wells Fargo CEO John Stumpf received a huge performance-based stock award in 2009 that ballooned in value to $21 million by the time it vested in 2013. At that time, Wells Fargo stock was below pre-crisis levels and the bank was holding nearly 85,000 mortgage loans in foreclosure.
  • PNC Financial CEO James Rohr got more than 290,000 stock options in early 2009, when the bank’s shares were trading at less than half pre-crisis values. Thanks to a bailout-fueled recovery, Rohr’s options spiked in value to more than $22 million by the time he cashed out 2013.

About the lead author: Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and has been the lead author on all 23 of the Institute’s annual Executive Excess reports. Her executive compensation analysis has been featured recently in a New York Times editorial and column, the Washington Post, and Bloomberg.

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Media Contact:

Sarah Anderson,, 202 787 5227

Sarah Anderson directs the Global Economy project at the Institute for Policy Studies. Sam Pizzigati is an associate fellow at the Institute for Policy Studies.

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