Elaine Chao, Donald Trump’s nominee to head the Department of Transportation, could collect up to $5 million in Wells Fargo preferred stock after assuming her new role in the Trump administration.
According to financial disclosure forms, Chao will receive a “cash payout for my deferred stock compensation” upon her confirmation as Secretary of Transportation. The annual payouts will begin in July 2017 and would continue through 2021.
“This is a golden parachute for government services that the large banks are now increasingly famous for offering. It is not illegal yet, but it does provide the former employee with substantial financial rewards from Wells Fargo, potentially creating a sense of indebtedness from the government official toward the bank,” ethics expert Craig Holman told The Intercept after reviewing Chao’s disclosure forms and Well Fargo’s executive compensation agreement.
“These golden parachutes for taking government positions are either a massively corrupting incentive structure — effectively a backdoor bribe to incoming government officials — or an abject waste of shareholder resources,” Kurt Walters, campaign director for Demand Progress, told the outlet.
Chao, who served as labor secretary under George W. Bush, sailed through her confirmation hearing last week without scandal. “Elaine Chao Gets Cozy Reception at Confirmation Hearing” is how the New York Times described her hearing.
Chao, the wife of Senate majority leader Mitch McConnell, served on Wells Fargo’s board between 2011 and 2015 and made an estimated $1.2 million for her services to the San Francisco, California-based bank. Coincidentally, 2011 was the same year the Obama administration-conceived Consumer Financial Protection Bureau says Wells Fargo began forcing its employees to “secretly open unauthorized accounts to hit sales targets and receive bonuses.”
Nevertheless, Chao says she’s committed to avoiding even the appearance of a conflict of interest should she become Transoprtion Secretary — citing her intent to submit a waiver or seek exemption if she engages in any matter that directly affects Wells Fargo.
To be sure, government job-triggered golden parachutes are nothing new. But they are precisely the kind of self-serving shenanigans Trump promised to stomp out.
Indeed, many of Obama’s top appointees came from financial firms that allocate six and seven-figure payments to senior executives who accepted government jobs.
Secretary of the Treasury Jacob Lew left Citigroup with $500,000 stock options guarantees. Obama’s Counselor to the Secretary of the US Treasury Antonio Weiss was set to receive $20 million in preferential stock and deferential payments from his previous employer, Lazard, upon entering government.
The news of Chao’s corporate payday comes on the heels of reports that Trump nominee for Secretary of State Rex Tillerson will receive a retirement payout worth at least $180 million, should he be confirmed.
Follow Jerome Hudson on Twitter @jeromeehudson
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