President Barack Obama and Treasury Secretary Timothy Geithner announced on Wednesday a plan to cap salaries for executives whose firms receive government financial rescue funds. Obama set limits at $500,000 and firms that want to pay executives above that mark would have to offer compensation packages that include stock options that cannot be sold or liquidated until they pay back the government funds.
In addition, the administration will also propose to Congress long-term compensation restrictions for companies that don't receive government assistance. These include:
- Requiring top executives at financial institutions to hold stock for several years before they can cash out.
- Requiring nonbinding "say on pay" resolutions - that is, giving shareholders more say on executive compensation.
- A Treasury-sponsored conference on a long-term overhaul of executive compensation.
Banks and other financial institutions that receive capital infusions, but are considered healthy, could waive the salary cap and the stock restrictions under the new Obama rules. But the companies would have to disclose the compensation and submit the pay plan to shareholders for a nonbinding vote. Sphere: Related Content
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2 comments:
While I believe less is more when it comes to government intervention, on this issue I wholeheartedly agree that income and perks should be limited for those who participate in the bailout until the money has been repaid. A good start but It's time to do more. How about the stocks and other options that could easily add up to millions of dollars?
That's a very good point, one that I overlooked in the article. I'd imagine that, over time, the net worth of those stocks could be worth very much and the taxpayers would likely not see any of that in return.
Also, government intervention seems to go against what our founding fathers had in mind. The first 100 days of this administration are starting off with a bang.
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