"Greed, for lack of a better word, is good."
 -- Gordon Gekko

Oh, the timeless words of Gordon Gekko. Once the words on the lips of most MBA graduates, today they probably elicit more sneers than cheers. With the economy in the dumps and the financial system teetering on the verge of collapse, the change of attitude can't be too surprising. Particularly since greed appears to have been one of the chief ingredients of this recessionary pie.

But with the release of The Wall Street Journal's executive compensation report, it looks like the heads of the major U.S. financial firms may be feeling the pinch of the financial meltdown themselves.

Breaking down the numbers
According to the Journal, some financial company CEOs have seen pay fall drastically from prior years. Here's a look at some of the changes in pay packages among the masters of the universe:



2008 Compensation (millions)

2007 Compensation (millions)

Vikram Pandit

Citigroup (NYSE:C)



Ken Lewis

Bank of America (NYSE:BAC)



Jamie Dimon




John Stumpf

Wells Fargo (NYSE:WFC)



Lloyd Blankfein

Goldman Sachs (NYSE:GS)



John Mack

Morgan Stanley



Source: Wall Street Journal and SEC filings.

It should be noted that the comparison for Citi's Pandit isn't terribly telling. He only started with Citi at the end of 2007, so it was still Chuck Prince who was collecting the corner office pay that year (he took home nearly $15 million in direct compensation). 

Also, as calculated for the Journal's coverage, the vast majority of Pandit's pay for 2008 came from stock incentive pay at the beginning of 2008, but due to the collapse of Citi's stock, today those grants are worth a small fraction of the $37 million they were worth at the grant date.

With the exception of Jamie Dimon, who arguably has done a darn good job at JPMorgan, these pay cuts are pretty sobering when compared to the big pay packages at places like Motorola ($104 million), Disney (NYSE:DIS) ($50 million), and eBay (NASDAQ:EBAY) ($24 million).

And even though the Journal didn't include battered insurer AIG (NYSE:AIG) in the list, the executive suite there easily had the most belt-tightening. Former CEO Martin Sullivan had total compensation of $12.2 million in 2007, while new CEO Edward Liddy has agreed to work for $1 (how very Google-y of him).

These numbers also don't take into account the wealth that many executives lost as the share prices of their companies declined. Blankfein and Lewis may have seen their holdings decline in the range of $400 million and $200 million, respectively, as Goldman and B of A stock sunk. Meanwhile, Jimmy Cayne and Dick Fuld of Bear Stearns and Lehman Brothers are not only out of a job, but each may have lost close to $1 billion as their company's stock turned to dust.

Don't cry for me
But these are the last guys we should be breaking out the violins for. With some of these firms knocking on death's door, big pay packages for the CEOs are hardly warranted. Further, the decline in equity holdings are a great reminder to the CEOs exactly why restricted equity compensation is used in the first place: If you drive the company into the ground your equity stake will suffer.

Assuming that the CEOs listed above have some good financial advisors and a safe place to put their money -- preferably somewhere like US Bancorp or Hudson City Bancorp -- they shouldn't have much trouble keeping up a high-on-the-hog lifestyle. Between 2005 and 2007, total cash compensation for Blankfein was over $75 million, Lewis collected $33 million, and the now-unemployed Prince put nearly $40 million in his bank account.

So ... lesson learned?
Even without new government regulations we probably won't see excessive risk taking at financial firms. Many of the worst-offending firms of the past few years have disappeared, whether they were sold for a song to a competitor or folded completely. Firms like Citigroup and AIG, which have made huge blunders but have been propped up, have had their top people replaced and have been thoroughly vilified as companies.

More importantly though, shareholders have been sobered. If shareholders aren't willing to support firms that take on huge leverage or go after the riskiest market segments, then CEOs are less likely to go down those avenues. Those that do may see share prices decline or shareholders push to oust them. This, of course, would be a big reversal from the few years past when CEOs of companies who weren't "dancing" -- as Prince put it -- stood to lose their jobs because they weren't keeping pace with the rest of the industry.

But in the long term, runaway greed is hard to keep at bay. It may be a few years or a few decades, but it will rise again -- and that's whether we let the current class of CEOs keep their jobs or throw them all on a raft and put them out to sea. As investors, regardless of what the government says, we shouldn't expect that a repeat can be prevented. Rather, we need to keep our eyes open and be prepared to sidestep the aftermath next time greed takes the wheel.

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Fool contributor Matt Koppenheffer unfortunately owns shares of Bank of America, but does not own shares of any of the other companies mentioned. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...