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The new rules encourage those companiex to award executives stock that must be held for a long periodeand can’t be entirely converted to cash until the TARP monegy is repaid to the government. the department contends, will alig “executives’ incentives with those of shareholders and Kenneth Feinberg, a mediator who led the Septembedr 11th Victim Compensation Fund, will reviewq payments and compensation plans at companies that have receivex “exceptional assistance.” The group includes Charlotte-based BofA (NYSE:BAC) as well as , , , Financial Services and . TARP recipients also must alloew shareholders to vote on executivecompensatio packages.
And they must disclose any perks worthu morethan $25,000 made to highly compensated employees and justify the benefit. The rulese prohibit companies fromprovidinfg “gross-up” payments to senior executives to cover taxeds due on perks. Treasury Secretary Tim Geithne r says the Obama administration also supportxs legislation that would require all publixc companies to give shareholders a nonbindintg vote on executivecompensation packages. In addition, he says Congress shoulxd give the Securities and Exchanges Commission the power to make compensation committeedsmore independent, similar to the standards in place for audift committees established by the Sarbanes-Oxley Act.
Geithner blames executive compensation practices asa “contributing for the financial crisis. “Incentives for short-term gaind overwhelmed the checks and balances mean to mitigate against the risk ofexcess leverage,” he But, he adds, “We are not capping pay. We are not settinyg forth precise prescriptions for how companie s shouldset compensation, which can often be counterproductive.
we will continue to work to develo standards that reward innovation andprudentt risk-taking, without creating misaligned
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