WASHINGTON – President Barack Obama plans to unveil a series of new pay curbs Wednesday, including strict limits on executive salaries, the latest salvo from Washington aimed at reining in financial firms receiving federal assistance.
Among the new restrictions being considered is a $500,000 cap on salaries for executives at companies that receive a substantial amount of government aid, according to a person familiar with the matter, The Wall Street Journal reported.
Executives would be able to get additional compensation in the form of restricted stock or other compensation that is tied to the long-term health of the company.
The Obama administration also plans to ban chief executives of such firms from receiving severance payments. And it is expected to require that firms receiving taxpayer money give shareholders more say in how top executives are compensated, according to people familiar with the administration’s plans.
The potential changes amount to one of the most aggressive efforts to limit executive pay, a movement that has been growing in strength in recent years but hadn’t made much headway until the financial collapse.
The administration’s tighter restrictions won’t apply to any of the existing financial-rescue programs, including Treasury’s $250 billion effort to inject capital into banks. But as the administration prepares to launch the second phase of the financial bailout, it is promising to impose stricter rules for some firms that get taxpayer money, although the exact criteria for which firms would qualify couldn’t be learned.
Final details of the program were still being worked out Tuesday night amid significant differences between various administration officials over how far to go. Obama is trying to lay the groundwork for a more aggressive banking bailout with politicians and the public who have grown infuriated that government aid hasn’t been used more to kickstart lending.
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