 |
||||||
| Tuesday, February 9, 2010 |
Contact Us
|
 RSS
|
|||||
|
|
| |
|||
|
||||||
|
||||||
|
|
ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
|
|
|
|
February 13, 2009 3:31 PM ET
Executives at companies receiving federal assistance would face stiffer limits on bonuses and severance under the stimulus bill than they would under President Barack Obama’s earlier order. They would face no salary cap under the legislation, however. The executive order from Mr. Obama imposed a $500,000 salary limit on senior executives at companies receiving “extraordinary aid” under the federal bailout. The compensation limits in the stimulus package would apply to more companies than those covered by the executive order, according to a copy of the final stimulus bill agreed to late yesterday. The curbs set by Pres. Obama were limited to a few companies, including AIG, Citigroup, and Bank of America. The stimulus bill would apply to the hundreds of banks receiving aid under the $700 billion bailout. It appears that the stimulus legislation—if passed—would trump the earlier executive order. “To the extent that something in the law contradicts something in the executive order, the law will take precedent,” said Brookings Institution scholar Thomas Mann, an expert on the federal government. “Otherwise, they may both be in force.” The Treasury Department is due to issue specific rules implementing the stimulus legislation in the month ahead, though Mr. Obama could simplify the agency’s task by withdrawing his order, Mr. Mann said. “For now, though, it’s all cloudy,” he said. Senate Banking Committee Chairman Chris Dodd (D-Ct.) sponsored the executive-pay provision in the bill. “These tough new rules will help ensure that taxpayer dollars no longer effectively subsidize lavish Wall Street bonuses,” Mr. Dodd said. Bonuses could only be paid in stock that would vest after the financial institution repays its federal loan, the legislation says. The size of the bonus would be limited to a third of the executive’s total annual compensation. A bonus could be subject to a claw back if it turns out that is was based on misleading public statements that boosted the value of a company’s stock. The average 2007 pay for chief executives at larger companies was nearly $12 million, with the vast majority of that compensation coming in the form of bonuses, according to industry studies. Under the Obama order, the size of executive bonuses are not restricted. But the payouts are limited to stock option grants that vest only after federal aid is repaid. A $400,000 executive pay cap and stiffer bonus curbs that passed the Senate were removed in conference between senior Senate and House members yesterday. An amendment sponsored by Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine) would have penalized companies that paid bonuses greater than $100,000 to executives after getting bailout money. The legislation being considered on Friday prohibits severance packages for the top executives at businesses getting federal aid. The Obama order prohibited any golden parachutes for the top 10 executives at company. The stimulus bill also requires any company getting more than $25 million in aid to set up a board compensation committee made up of independent directors. That committee would be required to review employee pay at least semiannually. “We applaud the absence of a salary cap which we think would restrict companies’ ability to keep employees they need to turn the companies around,” said Charles Tharp, executive vice president at the Center on Executive Compensation in Washington, which is funded by member companies. “We also applaud the fact that the boards of directors will have a primary role.” Under the bill, the restrictions would apply to at least the 25 highest-paid employees at companies receiving more than $500 million. The same curbs would apply to at least the 15 highest-paid executives at businesses that get between $250 million and $500 million in government assistance. For companies that receive between $25 million and $250 in aid, the five top-paid executives would be subject to the comp limits. A number of companies ave received more than $500 million in aid, including Citigroup, AIG, Bank of America, J.P.Morgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, PNC Financial Services Group and US Bancorp. The legislation also would require all companies getting aid to submit executive compensation to an advisory shareholder vote, a requirement long sought by investor advocates for all companies. The Treasury Secretary also would have to review compensation paid to the top 25 employees of each company that has gotten aid since the aid began last October. If these payments were found to be “contrary to the public interest” or the purpose of the legislation, he could negotiate for reimbursement. The board of any aid recipient must have a company policy for luxury expenditures such as corporate jets, entertainment and office renovations. Citigroup recently canceled a $50 million purchase of a luxury jet from France after new of the purchase became public. Similar to Sarbanes-Oxely, the CEO and chief financial officer of each aid recipient also would have to provide written certification that their company is complying with the legislative requirements.
|
|
|
|
Latest News
• Reversal? Stanford advisers sue the SEC
March 5, 10:52 AM EST
• Third of companies not complying with new tax reporting rule
March 4, 4:25 PM EST
• Regulators aware of problems at First National for six years: audit
March 4, 3:31 PM EST
• Influential advisory group to look at fair-value, off-balance sheet accounting
March 4, 4:16 PM EST
• In a first, NY State hopes to sell bankrupt insurer
March 4, 3:59 PM EST
CRAIN'S BENEFITS OUTLOOK 2009
SPECIAL REPORT
MOST POPULAR
|
MORE ANALYSIS
Crain Financial Group:
InvestmentNews |
Pensions & Investments |
Workforce Management
Copyright ©2010 Crain Communications Inc
All rights reserved.
Privacy Policy |
Terms & Conditions