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CEO Pay Loopholes

January 12, 2009 - by Donny Shaw

Mike Lillis at the Washington Independent reports on worries that the stricter executive compensation limits in Rep. Barney Frank’s TARP accountability bill are still full of loopholes:

>The heads of bailed-out banks could still receive nearly unlimited pay under a new Democratic proposal to rein in executive compensation for firms participating in the taxpayer-funded Wall Street bailout, according to at least one House Democrat, who hopes to add tighter restrictions this week.
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>Rep. Brad Sherman (D-Cal.) predicts that new legislation aiming to limit executive pay for firms helped by the Troubled Assets Relief Program (TARP) leaves loopholes allowing bank CEOs to reap millions of dollars even as taxpayers spend hundreds of millions to rescue their companies. Sherman said the new proposal takes steps to curb executive bonuses, but places no limit on “$1 million-per-month salaries” and other lavish perks, leaving corporations with broad freedom to pay their CEOs whatever they choose.
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>“My fear is that the bill will prohibit bonuses but will be a little unclear about stock options,” Sherman said on the House floor Friday. “That it will prohibit leasing the corporate jets, but will allow the companies to charter the corporate jets; and that it will put limits on bonuses but no limits on salaries.”

You can bet that if the loopholes are in the legislation, they’ll be in any informal agreement between Obama and Frank as well.

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Comments

Anonymous 01/13/2009 9:22am

Obama is abolishing the term limit on the president and he gave way 100s of billions in foreign aid entitlements with new five year budgets for US government programs.

We need to regulate Obama and Congress’ giving away of 100s of billions in foreign aid entitlements.

Anonymous 01/12/2009 4:37pm

So what? Why is legislation needed for this? Just put a line that says “The bonuses for all managers shall not exceed 50% of the average over the past five years for any manager as a condition of bailout out fund acceptance. The company is required to show bonus calculations of all managers to duly authorized Congressional and Executive Branch oversight committees or agencies.” Or some similar wording. Why are we making this difficult?
As for stock options, well, the purpose of stock options is to defer rewards. Why does that need to be mucked with? Aren’t we expecting better company results in the future?

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