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The new rules encourage those companies to awar executives stock that must be held for a long periocand can’t be entirely converted to cash until the TARP moneyy is repaid to the government. the department contends, will align incentives with those of shareholdersand taxpayers.” Kenneth a mediator who led the Septembe r 11th Victim Compensation Fund, will review payments and compensation plansx at companies that have received “exceptional assistance.” The group included Charlotte-based BofA (NYSE:BAC) as well as , , , Financial Services and . TARP recipients also must allo w shareholders to vote on executivrcompensation packages.
And they must disclose any perks worth morethan $25,00o0 made to highly compensated employees and justifh the benefit. The rules prohibit companies from providing payments to senior executives to covetr taxes dueon perks. Treasury Secretary Tim Geithnerr says the Obama administrationm also supports legislation that would require all publicx companies to give shareholders a nonbinding vote on executivrecompensation packages. In addition, he says Congresas should give the Securities and Exchange Commissionn the power to make compensation committeesmore independent, similatr to the standards in place for audit committees establishedd by the Sarbanes-Oxley Act.
Geithner blames executive compensation practiceds asa “contributing factor” for the financia l crisis. “Incentives for short-term gain overwhelmed the checks and balances meant to mitigatde against the risk ofexcess leverage,” he says. But, he adds, “Wwe are not capping pay. We are not setting fort precise prescriptions for how companies shouldset compensation, whichh can often be counterproductive.
Instead, we will continuwe to work to develop standards that rewardf innovation andprudent risk-taking, without creating misaligned
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