A Financial Week news account said the Troubled Assets Relief Program (TARP) legislation, enacted in October, seeks to give companies receiving federal aid incentives to curb what it calls excessive executive compensation.
Geithner, sworn in on Monday evening, indicated he would consider “extending at least some of the TARP provisions and features of the $500,000 cap to U.S. companies generally” and that he would also consider extending to all U.S. companies “other rules beyond those potentially in effect.”
“A number of the provisions that accompany the $500,000 cap are worthy of being considered for broader application,” Geithner said in written responses to questions submitted to Senator Carl Levin, D-Michigan, according to Financial Week .
Under the legislation, banks receiving bailout money must limit golden parachute payments to senior executives to no more than three times the executives’ base pay. The companies also must subject any bonuses or incentives to clawbacks if the payouts are based on banks’ misleading financial statements.
These limits apply to the chief executive officer, chief financial officer, and the next three mostly highly compensated executives in a bank receiving rescue cash.
A week ago, the Treasury also mandated that bank CEOs getting bailout money certify that they are complying with these executive compensation limits (see Treasury Issues Exec. Comp. Reporting Requirements ).