White House seeks ways to tame pay of top executives
WASHINGTON - Talking tough but stepping gently, the Obama administration rejected direct intervention in corporate pay decisions yesterday even as officials argued that excessive compensation in the private sector contributed to the nation's financial crisis.
Instead, the administration plans to seek legislation that would try to tame compensation at publicly traded companies through shareholder pressure and less management influence on pay decisions.
At the same time, the administration drew a sharp line between the overall corporate world, and those institutions that have tapped the government's $700 billion Troubled Asset Relief Program.
The administration issued new regulations yesterday that set pay limits on companies that receive TARP assistance, with the toughest restrictions aimed at seven recipients of "exceptional assistance."
The regulations limit top executives of companies that receive TARP funds to bonuses of no more than one-third of their annual salaries.
But in a significant expansion of authority, the regulations call for a special compensation overseer who will burrow into the pay practices of some of the country's biggest enterprises.
The administration named Kenneth Feinberg, a lawyer who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks, as a "special master" with power to reject pay plans he deems excessive at the seven companies with the biggest injections of public money.
Feinberg also would have authority to review compensation for the top 100 salaried employees at those firms.
The tempered broader approach to executive pay wasn't immediately embraced on Capitol Hill, where a leading Democrat said he wants to go farther.
In a lengthy statement released after the White House announcement, House Financial Services Committee chairman, Representative Barney Frank, a Massachusetts Democrat, said he wants legislation that would instruct the Securities and Exchange Commission to ban company boards from rewarding excessive risk taking.