$500,000 limit for execs who need government money
US president Barrack Obama’ administration will limit executive pay to $500,000 (£350,000) a year for government-assisted financial institutions, sources report.
It follows President Obama’s statement on TV that wanted to curtail excessive executive pay. "If the taxpayers are helping you, then you've got certain responsibilities to not be living high on the hog," President Obama said in an interview with NBC Nightly News.
Associated Press and Bllomberg report that Obama plans to announce the new limits with Treasury Secretary Timothy Geithner at the White House today.
An administration official familiar with the new restrictions said the most restrictive limits would apply only to struggling large firms that receive "exceptional assistance" in the future. Healthy banks that receive government infusions of capital would have more leeway.
Firms that want to pay executives above the $500,000 threshold would have to compensate them with stock that could not be sold or liquidated until they pay back the government funds.
The administration will also propose long-term compensation restrictions even for companies that don't receive government assistance, an official said.
The proposals include:
- Requiring top executives at financial institutions to hold stock for several years before they can cash-out.
- Requiring "say on pay" nonbinding shareholder resolutions.
- A Treasury sponsored conference on a long-term overhaul of executive compensation.
