Obama Gets Wall St.’s Attention – Caps Pay

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This isn’t going to be pretty…

Amid the outcry by taxpayers over banks and financial institutions receiving TARP funds while continuing to bankroll executive bonuses, frivolous spending, and golden parachutes, President Obama has imposed a $500,000 capeconomyinturmoil-tz-std-dollar2thumb on executive pay!

This dramatic intervention on the part of the government will have ramifications heard ’round the world.

Should a firm wish to pay an executive above the cap, they’d have to do so in stock which could not be sold or liquidated until after the bailout funds are paid back.

Severance packages for execs leaving failing firms will be eliminated – poof!

“The administration also will propose long-term compensation restrictions even for companies that don’t receive government assistance,” Obama said.

Other new requirements on “exceptional assistance” will include:

_The expansion to 20, from five, the number of executives who would face reduced bonuses and incentives if they are found to have knowingly provided inaccurate information related to company financial statements or performance measurements.

_An increase in the ban on golden parachutes from a firm’s top five senior executives to its top 10. The next 25 would be prohibited from golden parachutes that exceed one year’s compensation.

_A requirement that boards of directors adopt policies on spending such as corporate jets, renovations and entertainment.


Those proposals include:

• Requiring top executives at financial institutions to hold stock for several years before they can cash out.

• Requiring nonbinding “say on pay” resolutions — that is, giving shareholders more say on executive compensation.

• A Treasury-sponsored conference on a long-term overhaul of executive compensation.

Top officials at companies that have received money from the government’s Troubled Asset Relief Program already face some compensation limits.

JIM KUHNHENN/ Associated Press

Companies who received bailout funds prior to today’s announcement will be exempt i.e. Bank of America, Citigroup, Wells Fargo….

Pay for performance has taken on new meaning under Obama.

Expect corporate America to find loopholes in this new policy as well as face an exodus of senior management.

And of course we can assume that many of the banks and other institutions will now decide to NOT participate in the federal bailout program…

Sure, if a company has received TARP funds then the cap makes sense; but proposing to cap salaries in industries that DON’T receive government assistance???

Isn’t that the basis of capitalism?  That you be rewarded for your efforts?  Do we really want to open the door to the government dictating how much we can make in any given job??…

So entertainers, ball players, TV pundits – will Obama be capping their salaries???

And then of course we have to ask, if the stimulus is intended to inject funds into the US economy, then why isn’t “Buy American” implicit in this bailout?

It seems that President Obama has backed away from tying American bailout monies to buying American.  Isn’t this a dramatic change from campaign promises??

Just 15 days into this presidency…

More:

Obama Caps Executive Pay/AP

JOHN PRESCOTT

BostonKayakGuy

Top Real Estate Agent for more than 14 years, serving the real estate needs of Wellesley, South Natick, Weston, Needham, Wayland, Newton, Framingham and other MetWest communities. www.johnprescott.net

JOHN PRESCOTT

Vice President

Century 21 Commonwealth

508-523-9252

BostonKayakGuy…The MetWest Scene




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One Response

  1. While it should go without saying that even a legitimate President’s “ordered” $500,000 pay cap is an unenforceable intrusion into the private sector, as if that weren’t enough, Obama LACKS EVEN OSTENSIBLE AUTHORITY to issue the order UNTIL HE OVERCOMES “RES IPSA LOQUITUR” BY SUPPLYING HIS LONG FORM BIRTH CERTIFICATE AND PROVING HIS ELIGIBILITY TO BE PRESIDENT UNDER ARTICLE 2 OF THE US CONSTITUTION.

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