The intersection of TARP and the stimulus:  Congress Trumps Obama by Cuffing Bonuses for CEOs

The stimulus package Congress passed last night imposes new limits on executive compensation that could significantly curb multimillion dollar pay packages on Wall Street and goes much further than restrictions proposed by the Obama administration last week.

The bill, which President Obama is expected to sign into law next week, limits bonuses for executives at all financial institutions receiving government funds to no more than a third of their annual compensation. The bonuses must be paid in company stock that can be redeemed only when the government investment has been repaid. With the measure, lawmakers seek to address public outrage over extravagant Wall Street paydays even as taxpayers bail out the industry.

Unlike the rules issued by the White House, the limits in the stimulus bill would apply to top executives and the highest-paid employees at all 359 banks that have already received government aid.

…Other measures in the bill include a ban on golden parachutes to departing executives. This would apply to the top 10 most highly-paid employees at all financial institutions currently receiving government aid. The measure allows companies to continue to pay out deferred compensation and benefits such as pensions. There are billions of dollars in such awards on the books of financial institutions.

The restrictions imposed by the Obama administration last week prohibited golden parachutes to the top ten executives of companies requiring massive injections. It also allowed companies to pay up to a year’s compensation in severance to the next 25 highest-paid employees.

Who’s running the legislative show in Washington?  Possible answer here.

H/T Daily Beast

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