The Senate coalition, led by Finance Committee Chairman Max Baucus (D-Montana), addressed the executive compensation issue in a letter to Treasury Secretary Henry Paulson. The lawmakers said they were concerned after hearing that Paulson would hold back on part of the $700-billion bailout package that the government would not try to enforce the executive compensation limits in the bailout bill.
“In light of Wednesday’s announcement that the troubles asset auctions, to which many of the tax executive compensation provisions applied, will not be implemented, and the potential for further changes in the approach, we want to convey our concern that the executive compensation provisions continue to be a priority in the implementation of EESA (Emergency Economic Stabilization Act of 2008),” the Senate group wrote. “We expect that the Treasury, in implementing EESA, will carry out both the letter and the spirit of the law and the accompanying guidance. We also expect continued transparency throughout the process – on behalf of both Treasury and the companies involved in the rescue program.”
In the Finance Committee statement, Baucus argued that he had worked too hard when EESA was being debated on getting the executive compensation limits included in the bill to stand by idly if Paulson’s staff was not going to follow through on it.
“…we were also deliberate in crafting a law that makes sure that taxpayers are protected. It’s unconscionable that a company would be allowed to pay multi-million dollar bonuses after receiving a government handout when millions of Americans are struggling every day just to get by,” said Baucus, in the statement. “I insisted that this bill prevent companies from lavishing executives with golden parachutes and curb executive compensation overall, and I meant it. American taxpayer dollars will not be used to reward the firms and individuals that helped get us into this mess in the first place.”
The Senators’ letter to Paulson is available here .
Executive compensation has been in the spotlight recently as financial institutions receiving help must follow guidelines limiting executive pay, including a ban on golden parachutes for departing executives (See Banks Getting Bailout $$ Grilled over Executive Bonuses ).