FedEx CEO Discusses Banker Bonuses

Sen. Claire McCaskill, D-Mo., took to the floor of the Senate this week, angry about the over $18-billion in Wall Street bonuses that were given in 2008. She has argued that no banker be paid more than the president of the United States.


"They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses. Should these people be making more than the president of the United States? Not really, should they?" McCaskill said this week.


During our interview on "This Week," I asked FedEx CEO Fred Smith -- who himself took a 20 percent pay cut because of his company's performance -- what he thought of Sen. McCaskill's idea.
"The compensation structure on Wall Street is basically built on -- on bonuses, much more so than in the industrial sector," Smith said.


"As I understand it, the average bonus in that $18 billion is about $100,000 a year. The bonuses on Wall Street are down about 44 percent. So certainly up at the very top of the pyramid, people may be getting more than the president of the United States. But I think you have to go into the -- to the detail there."


Smith argued that while Congress has a right to put any kind of restriction on government bailout money, many middle-level bankers depend on their annual bonuses.
"It's a little bit, I think, an exaggeration to say that all the money is going to -- you know, the top few people on Wall Street. There are a lot of middle-level folks that -- that live on -- on those bonuses. And the lack of those bonuses, probably the biggest people are getting hit are the state treasuries of the state of New York and the city of New York."


However, Google CEO Eric Schmidt argued a much better compensation method is stocks.
"We're in this for the long term. And in the businesses that I'm familiar with, people are primarily compensated with stocks. Stocks are down. Stocks will eventually return. People will make money that way. That's a much better way to compensate people," Schmidt said.