CEOs Not Worried About Pay Caps - 24 Feb 2009

 
CEOs Not Worried About Pay Caps

by Dollars and Sense

http://www.dollarsandsense.org/blog/2009/02/ceos-not-worried-about-pay-caps.html

As they say, it's good to be a Bankster.

From the WSJ

President
Barack Obama's crackdown on Wall Street pay contains loopholes, and may
have limited impact in restraining compensation, according to some
executive-pay consultants and management attorneys.

Some
compensation professionals already are pointing out potential holes in
the rules, including tactics such as changing executives' titles or
rearranging pay packages. Just as past attempts by the government to
restrict executive pay largely backfired, these people warn, the new
curbs also may have unintended consequences.

The plan, announced
Wednesday, includes a $500,000 cap on annual compensation for senior
executives of companies that receive future "exceptional" government
aid. Additional compensation would have to be paid in restricted stock
or similar long-term incentive arrangements, which the executives could
cash in only after the government is repaid, with interest.

Other
recipients of future federal bailout money would have to place tougher
limits on severance packages and disclose luxurious perks, such as the
use of company jets. Annual compensation above $500,000 at these
companies would be subject to a nonbinding shareholder vote.

"The
mix of transparency and accountability is powerful and strikes the
right balance to allow banks to continue operating effectively while
operating under common-sense guidelines that rein in excessive
compensation," a Treasury Department official said Thursday.

Many
applauded the moves as a useful step to curb Wall Street compensation
practices that may have led to excessive risk-taking. But some critics
identified weaknesses, suggesting the restrictions be retroactively
applied to companies that already have received federal bailout cash.
They noted that the most stringent
restrictions likely would affect only a few firms; others could avoid
some of the curbs by putting extra pay to a shareholder vote.

Some said the plan doesn't limit total compensation, because it allows companies to boost awards of restricted stock.

"I
am fearful that companies will look at this as an opportunity to grant
more restricted shares and stock options to executives who already have
an abundant amount of equity," said Jesse Brill, a securities and
compensation lawyer who is chairman of CompensationStandards.com, an
advisory Web site. He would prefer barring executives from cashing in
stock until age 65 or two years past retirement to encourage long-term
decision making.

Michael Kesner, head of compensation consulting at Deloitte Consulting LLP, worries the plan allows executives to claim

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