WASHINGTON – Call it the maximum wage. President Barack Obama wants to impose a $500,000 pay cap on executives whose firms receive government financial rescue funds, a dramatic intervention into corporate governance in the midst of financial crisis.
The new restrictions, described by an administration official familiar with the new rules, are to be announced Wednesday morning at the White House. The steps set the stage for the administration's unveiling next week of a new framework for spending the money that remains in the $700 billion financial rescue fund.
"If the taxpayers are helping you, then you've got certain responsibilities to not be living high on the hog," President Barack Obama said Tuesday.
The official, speaking on the condition of anonymity because the plan had not yet been made public, said the most restrictive limits would apply only to struggling large firms that receive "exceptional assistance" in the future. Healthy banks that receive government infusions of capital would have more leeway.
Firms that want to pay executives above the $500,000 threshold would have to compensate them with stock that could not be sold or liquidated until they pay back the government funds, the official said.
I really like this idea. However, it disgusts me that Obama has to be the equivalent of a babysitter or scolding parent to these executives. One would think these people would have the sense to know we're all watching them.
I'd like to know how Bob CEO would feel if he gave $50,000 to a friend from his own savings to help pay off that friend's debt only to see that person blow it on a luxurious trip. This is what's happening here.
In Illinois we just booted our governor, CEO, for his actions. Maybe it's time for corporate America to do the same.