Executive Pay Limits May Prove Toothless - 15 Dec 2008

Executive Pay Limits May Prove Toothless

http://a4cgr.wordpress.com/2008/12/15/executive-pay-limits-may-prove-toothless/

Congress wanted to guarantee that the $700 billion financial bailout
would limit the eye-popping pay of Wall Street executives, so lawmakers
included a mechanism for reviewing executive compensation and
penalizing firms that break the rules.

But at the last minute, the Bush administration insisted on a
one-sentence change to the provision, congressional aides said. The
change stipulated that the penalty would apply only to firms that
received bailout funds by selling troubled assets to the government in
an auction, which was the way the Treasury Department had said it
planned to use the money.

Now, however, the small change looks more like a giant loophole,
according to lawmakers and legal experts. In a reversal, the Bush
administration has not used auctions for any of the $335 billion
committed so far from the rescue package, nor does it plan to use them
in the future. Lawmakers and legal experts say the change has
effectively repealed the only enforcement mechanism in the law dealing
with lavish pay for top executives.

“The flimsy executive-compensation restrictions in the original bill
are now all but gone,” said Sen. Charles E. Grassley (Iowa), ranking
Republican on of the Senate Finance Committee.

more...http://a4cgr.wordpress.com/2008/12/15/executive-pay-limits-may-prove-toothless/