Obama caps executive pay tied to bailout money

[HARDCORE]

http://news.yahoo.com/s/ap/20090204/..._executive_pay

Obama caps executive pay tied to bailout money

By JIM KUHNHENN, Associated Press Writer

WASHINGTON – President Barack Obama on Wednesday imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout money, saying Americans are upset with "executives being rewarded for failure."

Obama announced the dramatic new government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year.

The executive-pay move comes amid a national outcry over huge bonuses to executives heading companies seeking taxpayer dollars to remain afloat. The demand for limits was reinforced by revelations that Wall Street firms paid more than $18 billion in bonuses in 2008 even amid the economic downturn and the massive infusion of taxpayer dollars.

"This is America. We don't disparage wealth. We don't begrudge anybody for achieving success," Obama said. "But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."

The pay cap would apply to institutions that negotiate agreements with the Treasury Department for "exceptional assistance" in the future. The restriction would not apply to such firms as American International Group Inc., Bank of America Corp., and Citigroup Inc., that already have received such help.

Firms that want to pay executives above the $500,000 threshold would have to use stock that could not be sold or liquidated until they pay back the government funds.

Generally healthy institutions would have more leeway. They also face the $500,000 limit if they're getting government help, but the cap can be waived with full public disclosure and a nonbinding shareholder vote.

Obama said that massive severance packages for executives who leave failing firms are also going to be eliminated. "We're taking the air out of golden parachutes," he said.

Other new requirements on "exceptional assistance" will include:

_The expansion to 20, from five, the number of executives who would face reduced bonuses and incentives if they are found to have knowingly provided inaccurate information related to company financial statements or performance measurements.

_An increase in the ban on golden parachutes from a firm's top five senior executives to its top 10. The next 25 would be prohibited from golden parachutes that exceed one year's compensation.

_A requirement that boards of directors adopt policies on spending such as corporate jets, renovations and entertainment.

The administration also will propose long-term compensation restrictions even for companies that don't receive government assistance, Obama said.

Those proposals 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.

Top officials at companies that have received money from the government's Troubled Asset Relief Program already face some compensation limits.

And compensation experts in the private sector have warned that such an intrusion into the internal decisions of financial institutions could discourage participation in the rescue program and slow down the financial sector's recovery. They also argue that it could set a precedent for government regulation that undermines performance-based pay.

"It's not a government takeover," Obama stressed in an interview Tuesday with CNN. "Private enterprise will still be taking place. But people will be accountable and responsible."

Still, some elected officials were pushing for the stricter caps.

Sen. Claire McCaskill, D-Mo., has proposed that no employee of an institution that receives money under the $700 billion federal bailout can receive more than $400,000 in total compensation until it pays the money back. Her figure is equivalent to the salary of the president of the United States.

Even some Republicans, angered by company decisions to pay bonuses and buy airplanes while receiving government help, have few qualms about restrictions.

"In ordinary situations where the taxpayers' money is not involved, we shouldn't set executive pay," said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.

"But where you've got federal money involved, taxpayers' money involved, TARP money involved, and the way they have spent it, with no accountability, is getting close to being criminal."

[revwardoc]

Why stop at $500K? These asshats should be made to work for free since this whole thing was their fault.

[sn-e3]

No excutive of a corperation or bank that has stock holders should never recieve more then $250,000 per year and 20% bonus if profits are maintained that year. the gread in business is way out of hand they think they deserve everything but in real life it has to be earned.

[SuperScout]

If a corporate executive enhances his company's stock by say, 10% in value as compared to last year's valuation, shoudn't he be entitled to a 10% raise? Conversely, if the stock goes down 15%, cut his salary by the same amount.

And what about those 535 public servants who get a pay raise irrespective of what they do or don't do, what they pay or don't pay in taxes, or how many tax-payer-paid junkets they take? I say cut their salaries (and other perks) by 10% each year that they don't reduce government spending by the same 10% annually.

Remember, if the opposite of 'pro' is 'con,' then the opposite of 'progress' must by 'congress.'

[phuloi]

What SuperScout Said. You get what you earn. Quid pro quo. You`d be just amazed how people CAN do with incentives. Now, I`m a capitalist through and through but when the guys that worked for me made me money, I gave them more-and they knew it. Conversely, when my profit margin fell so did their paycheck total. Asshole and elbows was the result.

[SuperScout]

Setting aside the fiscal lunacy of limiting executive salaries, the more ominous message oozing out of the White House is wage and price control for everybody. Irrespective of the fact and economic reality that everywhere and anytime that communism has been tried, it has proven itself to be a colossal failure, but that reality is apparently lost in the corridors of the White House.

But if the Treasury Department, now headed up by one of several Obama-appointed tax scofflaws, implements regulations that curtail the executives' salaries, there will always be at least 3 dozen talented and gifted CPA's that will figure out a way to reward these same executives with other perks. That what CPA's do, and have done since the illegal birth of the IRS, which then makes it a bastard agency.

[revwardoc]

CEO -- Chief Embezzlement Officer.

CFO -- Corporate Fraud Officer.

P/E RATIO -- The percentage of investors wetting their pants as the
market keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

MARKET CORRECTION -- The day after you buy stocks.

CASH FLOW-- The movement your money makes as it disappears down the toilet.

YAHOO -- What you yell after selling it to some poor sucker for $240 per share.

WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.

PROFIT -- An archaic word no longer in use.

[SuperScout]

While your post is cute, it still ignores the basis or origin of the economic mess: the Community Redevelopment Act as signed into law by Slick Willie, and then the impediments to reforming this law by your very own Barney The Fudge Packer Franks, et.al. Gotta keep it fair and balanced, right?

[revwardoc]

Barney Franks is quite the hypocrite. He pushed hard for the bailout then bitches when the corporate execs use it for their own gain. What the hell did he think those greedy assholes were going to do...suddenly become filled with the milk of human kindness? He really need to take his head out of the sand...or his boyfriends butt.

[darrels joy]

Obama's approval rate is down & his disapproval rate is up. It happens every time he opens his mouth.



Someone needs to tell him that he was elected President of a Republic not King of a dictatorship.

He lied to get elected and now is saying "but I was elected to change"