Treasury limits bonuses at TARP recipients - Sacramento Business Journal:

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The new rules encourage these companies to awar d executives stock that must be held for a long periode of timeand can’t be entirely converted to cash until the TARP money is repaird to the government. the department contends, will align “executives’ incentives with those of shareholderssand taxpayers.” Kenneth Feinberg, a mediatof who led the September 11th Victim Compensatiob Fund, will review payments and compensatioj plans at companies that have receiveed “exceptional assistance,” including AIG, Bank of America, Chrysler, General Motors, GMAC and Chrysler Financial. TARP recipients must alloa shareholders to vote on executivecompensation packages.
They also must disclose any perks wortbh morethan $25,000 made to highly compensaterd employees and justify the benefit. The rulees prohibit companies from providing payments to senior executives to coverd taxes dueon perks. Treasury Secretary Tim Geithnert said the Obama administrationn also supports legislation that would require all public companiesx to give shareholdersa non-binding vote on executive compensation packages. Congress also should give the Securitiesz and Exchange Commission the powe to make compensation committees more similar to standards in placew for audit committees established bythe Sarbanes-Oxleyy Act.
Geithner blamed executive compensation practicews asa “contributing factor” for the financial crisis. “Incentivesa for short-term gains overwhelmed the checka and balances meant to mitigate against the risk of excess leverage,” he said. But, he added, “Wde are not capping pay. We are not settint forth precise prescriptions for how companiez shouldset compensation, which can often be Instead, we will continue to work to develolp standards that reward innovation and prudent risk-taking, withouft creating misaligned incentives.
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