A Reuters news report said the pay curbs were approved as an amendment to the stimulus bill that heads next to the Senate and, if approved there, to the White House where President Barack Obama is expected to sign it into law.
Reuters said the pay curbs would apply to companies getting taxpayer aid under the Treasury Department’s Troubled Asset Relief Program (TARP), launched in October by the Bush administration.
Under the measure drawn up by Senator Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, “golden parachute” severance packages for top executives at TARP beneficiaries would be banned (See Dodd Proposes Retroactive Exec Pay Limit ). So would pay plans that “encourage manipulation of the company’s reported earnings,” according to the news report.
“The decisions of certain Wall Street executives to enrich themselves at the expense of taxpayers have seriously undermined public confidence in efforts to stabilize the economy,” Dodd said in a statement, according to Reuters. “These tough new rules will help ensure that taxpayer dollars no longer effectively subsidize lavish Wall Street bonuses.”
The Treasury Department could go after past pay and bonuses from senior executives of TARP recipient companies if the compensation was found to have been awarded wrongfully or based on inaccurate criteria, according to the bill.
In addition, “say on pay” rules would be imposed on TARP firms to give shareholders more influence on pay decisions.