Congress Targets Executive PayJane Sasseen
Executive pay has emerged as one of the most contentious issues in the negotiations over the Treasury Department’s proposed $700 billion deal to buy up Wall Street’s junky morgage-related debt. Democrats in Congress, led by Barney Frank (D-Mass), the powerful head of the House Financial Services Committee, want the measure to include provisions that would limit the current pay as well as severance packages of executives at firms who sell their toxic securities to the government. Treasury officials have fought the move, though some limits on pay are likely to be included in the package in order to win enough support for it to pass. But how effective will they be? Not very, for the reasons outlined in this story on businessweek.com. Still, that won’t stop Congress from upping the ante. On CNBC early this afternoon, Frank said that the initial moves to limit pay and golden parachutes at firms which receive government help are only a first step. He said the current negotiations would also “lay the groundwork” for plans next year to place restrictions on executive pay on all US companies. In addition to the measures on the table now, he said Congress would also push to pass controversial “say-on-pay” measures which would give shareholders a vote on executive pay packages.