Shooting Eagles Down..To Earth!!!
Posted by Abhijit Kar on 05/02/2009
Obama to cap executive compensation
By Alan Beattie in Washington
The White House on Wednesday announced strict limits on executive pay for financial institutions receiving “exceptional assistance” from the US government, part of its drive to tighten up the rules for bailing out Wall Street.
An administration official said that pay would be limited to $500,000 for the senior executives in institutions such as Citigroup and AIG that were receiving targeted relief from government funds.
Executives could also receive restricted stock, but it could only pay out after government support had been repaid.But administration officials said the pay curbs applied only to the top executives, suggesting that they could continue to pay other employees more.
President Barack Obama said: “For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste – it’s a bad strategy – and I will not tolerate it as president.”
The restricted stock strategy would assure that senior executives of companies receiving exceptional assistance had incentives aligned with the long-term interests of shareholders as well as minimising the costs to taxpayers, the official said.
The administration also said that banks would face tougher rules on transparency including the use of corporate jets, office renovations, entertainment and “golden parachute” payments to departing executives.”
We will have to do more, substantially more, to fix this crisis,” Tim Geithner, Treasury secretary, said on Wednesday.”Next week, we are going to outline a comprehensive program for financial recovery,” Mr Geithner said. “This program will be directed at supporting the flows of credit that are essential for our economy to begin growing again.” Companies that received less specific help from the federal government, such as the capital purchase programme available to a wide range of financial institutions, would be able to pay their executives more than $500,000 only by full public disclosure of their salaries and a non-binding shareholder vote on compensation. Sent from BlackBerry® on Airtel
euandus2 said
How many people will look at what the House voted down in terms of tougher rules…due to pressure or “sky is falling warnings” from the banking lobby. It makes the “tougher rules” a bit like gilding the lilly (esp. relative to the bank bonus 50% windfall tax in Britain and France in the EU).
Source: http://euandus3.wordpress.com/2009/12/10/depending-on-the-bankers-to-write-regulations-a-conflict-of-interest-involving-complexity-and-expertise/