NEW YORK - Standing on Wall Street, President Bush took aim yesterday at lavish salaries and bonuses for corporate executives and urged corporate boards to "step up to their responsibilities" by linking compensation packages to performance.
Bush's "State of the Economy" speech was aimed at bringing his economic message out of the shadows of the Iraq war. On Bush's second straight day focused on the economy, the government reported faster-than-expected growth of 3.5 percent in the final quarter of last year.
The president acknowledged Americans' continuing nervousness about their financial picture, despite a string of reports that provide reason for optimism. He said that some workers were being left behind in the booming economy and that the disparity between the rich and the poor was growing.
"The fact is that income inequality is real. It has been rising for more than 25 years," the president said. "The earnings gap is now twice as wide as it was in 1980," he said, adding that more education and training can lift people's salaries.
Bush spoke to an audience of business leaders at Federal Hall, a symbol of America's democracy and its economic resilience. Later, he stopped along Broad Street, where the New York Stock Exchange is based, to shake hands with New York police officers and then ducked inside the exchange.
The surprise visit caused a frenzy on the already chaotic trading floor. It was so crowded that traders standing just five feet from Bush had a better view of him on television screens than in person.
In his address, Bush said he realized that stories about the enormous salaries and other perks for chief executives often created anger and uncertainty that affected the country's investors.
The president did not endorse any government role in reducing those packages. Instead, he highlighted new federal rules that the administration favors for providing a better path toward wise compensation decisions by companies.
"Government should not decide the compensation for America's corporate executives," he said. "But the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders."
The new rules, effective in December, give investors access to clearer and more detailed information from public companies on their top executives' pay packages and perks. Their impact will become apparent as corporations begin issuing 2006 annual reports this spring.
Bush's words on pay were met with complete silence from the business crowd he addressed.
Huge salaries and other perks for chief executives have drawn investor ire and made splashy headlines. Anger over executive compensation that is not tied to performance has spread from shareholders to union activists and buttoned-down mutual fund trustees.
He said government shouldn't dictate executive pay.