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| Tuesday, March 16, 2010 |
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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.
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February 4, 2009 10:42 AM ET
(Reuters) — President Barack Obama kicked off a campaign to rein in corporate compensation on Wednesday with rules limiting executive pay to $500,000 a year for companies getting taxpayer bailout funds in the future. Mr. Obama, who sharply criticized Wall Street chiefs for accepting billions of dollars in bonuses last year while the economy fizzled, had promised compensation reform as part of a package of stricter regulations on the financial industry. "As part of the reforms we are announcing today, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000—a fraction of the salaries that have been reported recently," Mr. Obama said in prepared remarks. Mr. Obama, who has sharply criticized Wall Street chiefs for accepting billions of dollars in bonuses last year while the economy fizzled, demanded that firms seeking federal help must not be "up to the same old tricks" and said he would not tolerate massive compensation packages in the midst of the economic crisis. The restrictions were a first step in a broad effort to overhaul compensation practices and are likely to be popular with average Americans. An Obama administration official said the new rules would require companies that get exceptional government funds—such as financial giant Citigroup and insurer AIG have in the past—to abide by the cap. Additional compensation must be limited to restricted stock that does not vest until government money is paid back with interest. Companies that have previously received bailout money would have to agree to stricter oversight and prove that they have followed already established restrictions on executive compensation, which are widely seen as being too lax. The White House aims to hold banking executives accountable for the money they receive from government coffers with the new rules, which were presented as being in the interest of shareholders and taxpayers alike. “This is a reasonable approach,” Mr. Obama said when describing the restrictions in an interview with CNN on Tuesday. “It’s not a government takeover. Private enterprise will still be taking place, but people will be accountable and responsible and that’s what we have to restore in the financial system in general.” Mr. Obama’s measures come after his own outrage and public outcry over $18.4 billion in bonuses paid out in 2008 at a time when taxpayer money was shoring up the financial system. The rules require banks to give shareholders greater say over the money paid to company chiefs, according to information provided by the administration official. They also put restrictions on golden parachutes—the lavish severance packages common for senior executives—and require more transparency for costs such as aviation services, big parties, office renovations and conferences. Healthier financial institutions that receive more generally available government funds will also be subject to the requirements unless shareholders vote to waive them. Mr. Obama, who views excessive compensation as symptomatic of the missteps that led to the financial and economic crises, did not stop with short term goals, however. His announcement set in motion a long-term process to rein in high salaries on Wall Street, including steps to require all public financial institutions—including those not receiving government funds—to disclose compensation arrangements and prove that they are compatible with sound risk management. Measures to make corporate executives adopt a long-term approach to their business, such as requiring them to hold stock for several years before it can be cashed in, would also be considered. To consolidate opinion, Treasury Secretary Geithner will hold a conference with shareholder advocates, investors, executives and other interested parties to discuss executive pay reform at banks and help set guidelines for the future.
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Latest News
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March 5, 10:52 AM EST
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March 4, 3:59 PM EST
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