House Passes New Bill with More Restrictions on Executive Pay

Wednesday, April 8th, 2009 | Executive Compensation, Federal Legislation | No Comments

The House has approved H.R. 1664, the Pay for Performance Act of 2009, to restrict executive compensation at companies that have received funds from the Troubled Assets Relief Program (TARP). The decision to impose additional limitations on executive payouts follows a massive public outcry about the $165 million that American International Group, a recipient of nearly $200 billion in bailout funds, has issued in payouts to its executives in the last month. The bill, which amends the executive compensation provisions of the Emergency Economic Stabilization Act of 2008, would bar recipients of TARP funds from paying any bonus that is “unreasonable or excessive” or that is not “directly based on performance-based measures.”  The bill also calls for financial institutions subject to the new compensation requirements to submit an annual report to the Treasury Secretary stating how many executives received or will receive total compensation above specified dollar amounts during the fiscal year. To learn more about The Employment Law Group® law firm’s Executive Counsel Practice, go to http://www.employmentlawgroup.net/PracticeAreas/Executive-Compensation.asp.

President Caps Executive Pay at $500K

Thursday, February 5th, 2009 | Executive Compensation, Severance Agreements | No Comments

Yesterday, President Obama announced that senior executives of companies receiving the most funds from the Troubled Assets Relief Program (TARP) will have their pay capped at $500,000.  The decision to limit executive compensation follows a report that financial institutions that received money from the economic bailout paid as much as $18 billion in bonuses in the last year despite the economic crisis.  In addition to limiting executive compensation, the plan to protect taxpayers’ interests also includes:

• Decreasing severance pay for top executives who leave TARP funded institutions;
• Increasing the number of senior executives subject to the golden parachute rule;
• Restricting the liquidation of stock incentives until government funds are repaid; and 
• Requiring corporate boards to modify their policies on executive perks.

To learn more about The Employment Law Group® law firm’s Executive Counsel Practice, go to http://www.employmentlawgroup.net/PracticeAreas/Executive-Compensation.asp.

CEO Compensation Trends in 2008

Wednesday, January 7th, 2009 | Executive Compensation | No Comments

In a report released on December 24, 2008, the Conference Board announced that CEO compensation is increasingly in the form of stock rather than cash and stock options.  However, two-thirds of industries studied saw an increase in median CEO cash compensation comprised of salary, bonus, and non-equity incentive compensation.  The greatest increase in median CEO cash compensation was in the insurance industry.  Food and tobacco industry executives enjoyed the largest increase in median total compensation comprised of cash compensation plus present value of options, value of stock awards, change in pension value and earnings on non-qualified deferred compensation, and all other compensation.  The effect on executive compensation of the current recession that started in December 2007 is not reflected in the report, since it is based on proxy filings covering fiscal year 2007.

For information on The Employment Law Group® law firm’s Executive Compensation practice, click here.  To view the Conference Board press release, click here.