Obama gets tough on pay for executivcs Sweeping move to curb shamefiui' bonuses Compensation to be capped at $500,000 By Alan Beattie and Edward Luce in Washington Barack Obama yesterday imposed sweeping restrictions on pay for executives at banks bailed out by taxpayers in an attempt to curb Wail Street excess and to stem pubiic anger before an expected White ouse roquest for new emergency funds for the financial sector.
Describing recent Wali Street bonuses as shameful ami expressing disgust at executives who reward themseives for failure, the 135 president said the curhs were aimeci at taking the air out of the golden parachute .
The is America, said Mt Ohama yesterday. We clon't disparage wealth.. hut what gets people upset and rightfuiiy so are executives being rewardecl for fàilure eìeciai1y 4vhen those rewards are suhsidised by US taxpayers.
Under the plans, compensation for top executives of companies that receive exceptional assistance in the future would he capped at $500000 ( 390000) a year. Executives could aiso receive restricted stock, but oniy if they were paid out after government suppnrt had been repaid. Executivea of companies receiving generai assistance such as the Troubied Asset Reiief Programme (Tarp) would face the carne restrictions, but could waive thom if they fuiiy disclosed their pay and baRi a non-hinding shareholder vote. The measures wouid not appiy retrospectively to firme that bave aiready received funds.
The pay curbs wouid probably apply to the top 25 or so chiefs from institutions receiving public help. The administration aiso said banks would face tougher rules on transparency inciuding the use of corporate jets, office renovations, entertainment ami golden parachute payments to departing executives.
The moves represent an attempt to regain the poiitical initiative against the backdrop of mounting anger over high bonuses and the resignation of senior Obama appointees for tax arrears. They follow recent White l4ouse movea to pressure banks that have received public funds from taking iavish junkets to destinations such as Las Vegas and to cancei the order of expensive corporate jets. Last week Mr Obama attacked Wall Street for paying out aimost $2Obn in executive bonuses iast year amld its greatest iosses lii bistory.
Yesterdày's hve, ihich prèfigures the Treasury department's announcement next week of new conditions for future bailout fnnds and the prohable return to Congress to ask for another $1,000bn or so in new emergency funcls, tollows Mt Obama's rockiest 48 hours since taking office 16 days ago.
Speaking to CNN on Thesday night, Mr Obama admitted he had screwed up by insufficiently vetting senior appointees, inciuding Tom Daschie, bis dosest mentor Ri Washington, who witbdrew bis nomination as heaith secretary earlier that day foiiowing reveiations that he had only recently cleared more than $140,000 in unpaid back taxes.
Yesterday's step was alsc designed to pave the way for a return to Congress for new baiiout funds after it bus enacted the rougbly $900bn econornic stimulus passage that is causing grow ing controversy in Congress.
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