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US to Expand Executive Pay Supervision

Administration to announce new rules, add pay-oversight chief

By Matt Cantor,  Newser Staff

Posted Jun 8, 2009 6:44 AM CDT

(Newser) – The Obama administration is set to announce new executive pay guidelines for banks and other corporations that have received bailout funds, the New York Times reports. Any company that’s taken two rounds of TARP cash—including Citigroup, Bank of America, AIG, GM and GMAC—will have to get pay changes approved by a new US compensation watchdog, Kenneth Feinberg, who oversaw 9/11 family payouts. But the new rules are also expected to set standards for companies that haven't enjoyed federal funding.

The goal is to give "broad pay principles" that would allow the Treasury Department to step in to prevent dangerous encouragement of risk taking. “This is the government trying to tell the TARP banks not to worry, because everyone else’s compensation will be monitored, too,” says a financial recruiter. It's not clear how stringent the regulations will be, or how excessive risk taking will be defined, the Times notes.

President Barack Obama returns to the White House following a trip to Normandy for a D-Day commemoration, Sunday, June 7, 2009.
President Barack Obama returns to the White House following a trip to Normandy for a D-Day commemoration, Sunday, June 7, 2009.   (AP Photo/J. Scott Applewhite)
In this Aug. 15, 2007 file photo, Kenneth R. Feinberg speaks at his office in Washington.
In this Aug. 15, 2007 file photo, Kenneth R. Feinberg speaks at his office in Washington.   (AP Photo/Charles Dharapak, File)
In this May 12, 2009 file photo, Treasury Secretary Timothy Geithner speaks at the Treasury Department in Washington.
In this May 12, 2009 file photo, Treasury Secretary Timothy Geithner speaks at the Treasury Department in Washington.   (AP Photo/Alex Brandon, File)
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COMMENTS
Showing 3 of 6 comments
Robert_Dada
Jun 8, 2009 10:38 AM CDT
This will never work. If it gets too restrictive, these firms will just incorporate overseas to avoid compliance.
MarkFL
Jun 8, 2009 9:03 AM CDT
Sorry I just looked at the average CEO pay and it is way over 10 million dollars a year. An extended tax bracket system would work. Conservative CEOs would do anything to not pay taxes and liberal ones would love to hand over their money!
MarkFL
Jun 8, 2009 8:59 AM CDT
You almost made sense there, justme. "Government should regulate, not run, business. This is too close to the former." This is the former which you said! The government wants to regulate executive pay, not run businesses. It sounds like you agree! The best way to do this is to impose a severe tax rate if someone's annual pay tops out over 2 million. That will stop companies from paying exorbitantly without stopping good compensation for those who deserve it or at least it will make it a charitable donation to the rest of us if they decide to. Maybe we can compromise by changing the number. I know what you conservatives are going to say. Taxes are evil. However, this will only affect the CEOs who make crazy amounts. You could even exempt the salaries from businesses of a certain size. This will work is anyone has the guts for it.

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