WASHINGTON A prominent labor group is pressing big banks and investment companies about their payment practices for executives who leave for government service.
The AFL-CIO sent letters to seven large Wall Street firms, raising questions about accelerated or continued payment of vested compensation, which is paid out over a number of years, for top officials who leave to run for office or join the government.
Banks may see the program as a chance to encourage public service, but the group argues that typically employees lose the right to such equity awards if they leave a firm early and that ongoing payment amounts to a "golden parachute."
"[I]f a senior executive leaves to assume a government position [the bank] will lose a valued member of the company and the departure will result in a substantial loss of human capital," writes Richard Trumka, president of the AFL-CIO, in the letters. "Why is it in the interest of [the bank] to incentivize such departures? Surely [the bank] does not expect favorable government treatment from its former executives."
The letters were sent to Morgan Stanley, Citigroup, Goldman Sachs, JPMorgan Chase, Bank of America, Wells Fargo and Lazard.
The move comes amid growing concerns about the so-called "revolving door" between Wall Street and the banking agencies. Critics, including Sen. Elizabeth Warren, D-Mass., and the Independent Community Bankers of America, have spoken out in recent days against Antonio Weiss, a Lazard executive, who President Obama has named to be the Treasury Department's undersecretary of domestic finance.