A Bit More on Obama’s Executive Compensation Stand
Following up on Mary’s post, it’s also worth noting that the $500,000 executive-pay limit for bailed out banks to be unveiled today by the White House seems to apply to total compensation — meaning salary, bonuses, stock options*, everything.
That would be a sharp break from the Bush administration’s Wall Street bailout bill, which did very little to rein in the enormous pay packages enjoyed by Wall Street executives, even after they’d run their companies into the ground. Under TARP, for example, the limits on golden parachute retirement packages applied only to the five top-paid employees of the bailed-out firm — and only if the firm accepted more than $300 million of taxpayer funding.
The Obama team’s limits also seem poised to go further than the TARP-reform bill passed by the House last month. That proposal, which the Senate never considered, would have limited executive bonuses and incentive-based pay, but not salaries — a loophole that would have allowed bailed-out firms to pay their executives anything they pleased.
Rep. Brad Sherman (D-Calif.) previously pushed a proposal to cap total executive compensation at $1 million, and Wall Street should have taken it when they could. President Obama appears prepared to cut that figure in half.
As Mary points out, few outside of lower Manhattan will be shedding tears.
*Update: The $500,000 cap does not include stock options. Click here to see more loopholes in the Obama plan.