 Obama sets executive pay limits
(China Daily)
Updated: 2009-02-05 07:51
US President Barack Obama kicked off a campaign to rein in corporate compensation yesterday with rules limiting executive pay to $500,000 a year for companies getting taxpayer bailout funds in the future. Obama, who sharply criticized Wall Street chiefs for accepting billions of dollars in bonuses last year while the economy fizzled, had promised compensation reform as part of a package of stricter regulations on the financial industry. The restrictions were a first step in a broad effort to overhaul compensation practices and are likely to be popular with average Americans, potentially diverting attention from Tuesday's high profile withdrawal of former Senator Tom Daschle's nomination to lead Obama's healthcare reform initiatives. An Obama administration official said the new rules would require companies that get exceptional government funds - such as financial giant Citigroup and insurer AIG have in the past - to abide by the cap. Additional compensation must be limited to restricted stock that does not vest until government money is paid back with interest. Companies that have previously received bailout money would have to agree to stricter oversight and prove that they have followed already established restrictions on executive compensation, which are widely seen as being too lax. The White House aims to hold banking executives accountable for the money they receive from government coffers with the new rules, which were presented as being in the interest of shareholders and taxpayers alike. "This is a reasonable approach," Obama said when describing the restrictions in an interview with CNN on Tuesday. "It's not a government takeover. Private enterprise will still be taking place, but people will be accountable and responsible and that's what we have to restore in the financial system in general." His announcement set in motion a long-term process to rein in high salaries on Wall Street, including steps to require all public financial institutions to disclose compensation arrangements and prove that they are compatible with sound risk management. Agencies
 (China Daily 02/05/2009 page7) |
