Congress to Question Wall Street Executives on Pay (Update1)

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Congress to Question Wall Street Executives on Pay (Update1)

By Ian Katz



March 7 (Bloomberg) -- A House committee will question Wall Street executives today over compensation awards reaching hundreds of millions of dollars while shareholders bear the brunt of billions in writedowns from subprime mortgages.

Former Chief Executive Officers Charles Prince of Citigroup Inc. and Stanley O'Neal of Merrill Lynch & Co., and current CEO Angelo Mozilo of Countrywide Financial Corp. are scheduled to testify before the House Oversight and Government Reform Committee in Washington.

Today's hearing aims ``to understand why so much money is given to these executives even when they're failing,'' Henry Waxman, a California Democrat and chairman of the oversight committee, said in an interview yesterday. ``What's the business justification for having no connection between pay and performance?''

The increase in congressional scrutiny follows more than $180 billion of asset writedowns and credit losses reported by the world's largest banks and securities firms since the beginning of 2007. Merrill and Morgan Stanley, two of Wall Street's biggest firms, are planning changes to executive pay packages in response to investor backlash.

Shareholders are wielding ``pitchforks like the last scene of Frankenstein'' and demanding companies not ``pay for failure,'' said Frank Glassner, CEO of San Francisco-based Compensation Design Group Inc., an advisory group on pay issues.

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