TARP Recipients To Submit Executive Pay Changes For Regulatory Approval

Posted by Orb Staff on June 08, 2009 No Comments
Categories : Residential Mortgage

ama administration is planning to require all corporate recipients of federal bailout funds to submit proposed executive pay changes for pre-approval to a new federal regulator, which will monitor such compensation practices. The New York Times reports that companies receiving funds from the Troubled Asset Relief Program (TARP) can only pay their top 25 executives bonuses up to one-third of their salary. However, there is no salary cap on executive pay. The administration's new proposals, which have yet to be made public, would reportedly authorize regulators to enforce changes in compensation arrangements if it is found that the corporate entity is encouraging too much risk-taking. The regulations would cover a wide stretch of the financial services industry, including the U.S. operations of foreign banks, hedge funds and private equity firms. The proposals would also require companies receiving TARP aid to be subject to regulatory review of executive compensation after the federal aid has been fully repaid. SOURCE: New York

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