The Obama administration outlined plans today to tighten restrictions on executive compensation for future recipients of federal aid under the government's financial rescue program, but the vast majority of firms would be able to opt out of most of the limits.
Companies that need special assistance from the government to survive would face mandatory restrictions on compensation for their senior executives: no more than $500,000 in salary and no additional compensation other than shares of the company's stock that can only be redeemed after the government investment is repaid.
So far the government has provided that kind of extraordinary aid to American International Group, Citigroup and Bank of America. However, the rules do not apply retroactively to any of the 359 banks that have received government aid already, so these three firms are not subject to the new restrictions. But administration officials said they expect the government will need to stage more massive rescues as the financial system continues to deteriorate.
President Obama said the new rules were needed to curb Wall Street excesses that continued even after top companies accepted taxpayer help. Last week he criticized the billions of dollars in bonuses paid on Wall Street after a year of collapse and record-setting losses.
While overspending and outrageous compensation must come to an end, will these regutlations send the countries top executives to work in forein countries (Dubai) and companies that have not accepted tarp funds. Will the executives be outsourced.
What about the smaller regional banks that are doing well. The executives can leave these major companies in financial ruin and run the smaller cash rich regional banks and still make more.
Goodby Wallstreet and hello Sacramento, Omaha, Cedar Rapids, ect.
Mark my words, some regional bank will be on the cover of Business Weekly or Forbes with in five years.
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