Executive Compensation Limits? Hardly
Just how tough are the Obama administration’s new executive compensation limits for bailed out firms? Well, as a hint, Wall Street sees them as no threat at all. Indeed, The Washington Post today gets a few telling quotes from bankers who are giddy that these are the only standards they’ll be held to.
“Our people kind of thought it was a non-event,” one executive of a large bank said. “There’s nothing in there that’s radical. It’s not like the horrible and unethical action from Congress where they were putting artificial caps on pay or trying to steal back bonuses . . . I don’t think there are worries about it on Wall Street.”
From another source:
“The focus was really on a light touch approach,” [another] person added, speaking on condition of anonymity because the discussions are ongoing. “Nobody said the government needs to regulate with a heavy hand, like caps or micromanagement, but that investors needed more tools to increase disclosure and director accountability.”
Indeed, while the new compensation plan targets the top executives and highest-paid employees at the seven companies receiving the most bailout cash, executives at the hundreds of other bailed-out companies will go largely untouched. Example: While the plan places limits on bonuses (as mandated by an amendment passed by Congress earlier in the year), it limits the definition of “bonus” to exclude the commissions that send the pay for many traders soaring.
The Obama plan also scraps the $500,000 salary cap the administration had proposed in February for executives of bailed out firms. President Obama unveiled that cap with the statement that Americans were outraged with “executives being rewarded for failure.” Could it be that just four months later the White House no longer sees a problem with rewarding the same failure?
This is what happens when Wall Street runs the Treasury.