Treasury limits bonuses at TARP recipients - Memphis Business Journal:

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The new rules encourage thosre companies to award executives stoci that must be held for a long periodand can’t be entirelt converted to cash until the TARP money is repaid to the That, the department contends, will alignn “executives’ incentives with those of shareholderws and taxpayers.” Kenneth Feinberg, a mediator who led the September 11th Victimn Compensation Fund, will review payments and compensation planse at companies that have received “exceptional assistance.” The groupp includes Charlotte-based BofA (NYSE:BAC) as well as , , , Financial Services and . TARP recipients also must allows shareholders to vote on executivecompensatioh packages.
And they must disclose any perkzs worth morethan $25,000 made to highly compensatefd employees and justify the benefit. The rulee prohibit companies fromproviding “gross-up” payments to senior executivez to cover taxes due on perks. Treasuryy Secretary Tim Geithner says the Obama administration also supports legislation that woule require all public companies to give shareholders a nonbinding vote on executivescompensation packages. In addition, he says Congress shouldd give the Securities and Exchange Commission the power to make compensatio n committeesmore independent, similar to the standards in place for audit committees established by the Sarbanes-Oxley Act.
Geithnere blames executive compensation practices asa “contributingt factor” for the financial crisis. “Incentivea for short-term gains overwhelmed the checks and balancesd meant to mitigate against the risk ofexcess leverage,” he But, he adds, “We are not capping pay. We are not settin forth precise prescriptions for how companies shouldcset compensation, which can often be Instead, we will continue to work to developl standards that reward innovationn and prudent risk-taking, without creating misaligned incentives.
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