SWEEPING RESTRICTIONS on pay for executives at financial institutions were outlined by Barack Obama yesterday in an attempt to curb excesses at Wall Street firms bailed out by taxpayers.
Describing recent Wall Street bonuses as “shameful” and expressing “disgust” at executives who reward themselves for failure, Mr Obama said the restrictions were aimed at “taking the air out of the golden parachute”. Under the plans, compensation for senior executives of companies that receive “exceptional assistance” in the future would be capped at $500,000 (€389,120) a year. Chiefs could also receive restricted stock, but only if they were paid out after government support had been repaid.
Executives of companies receiving general assistance – such as the troubled asset relief programme (Tarp) – would face the same restrictions, but could waive them if they fully disclosed their pay and held a non-binding shareholder vote. The measures would not apply retrospectively to firms that already have funds.
The pay curbs would probably apply to the top 25 or so executives from institutions receiving exceptional public help.
The administration also said banks would face tougher rules on transparency including the use of corporate jets, office renovations, entertainment and “golden parachute” payments to departing executives.
“This is America,” said Mr Obama yesterday. “We don’t disparage wealth . . . but what gets people upset – and rightfully so – are executives being rewarded for failure especially when those rewards are subsidised by US taxpayers.”
The moves represent an attempt to regain the political initiative against the backdrop of mounting anger over high bonuses and the resignation of senior Obama appointees for tax arrears. They follow recent White House moves to pressure banks that have received public funds from taking lavish junkets to destinations such as Las Vegas and to cancel orders of expensive corporate jets. Last week Mr Obama attacked Wall Street for paying out almost $20 billion in executive bonuses last year amid its greatest losses in history. – ( Financial Timesservice)
