White House Wants Changes in Executive Pay Rules
Facing a stricter approach to limiting executive bonuses than it had favored, the Obama administration wants to revise that part of the stimulus package even after it becomes law, White House officials said Sunday.
While President Barack Obama plans to sign the $787 billion stimulus bill in Denver on Tuesday, his administration will seek changes in the government's approach to executive compensation, senior Obama adviser David Axelrod said.
"We all have the same goal. We all have the same sentiment. And we want to do something that's workable, and we'll work with them to get to that point," Axelrod said on "Fox News Sunday."
Obama press secretary Robert Gibbs, appearing on CBS's "Face the Nation," also said the administration would seek to "strike the right balance" on the compensation question by discussing changes in the provisions with House and Senate members.
Asked if Obama would enforce the bill and was satisfied with it, Gibbs replied, "We will sign this bill into law on Tuesday."
Two top lawmakers on congressional committees that oversee financial regulations appeared to dismiss the possibility that the administration would not follow the compensation requirements.
"Mr. Gibbs may not like it, but it is going to be enforced," Rep. Barney Frank, chairman of the House Financial Services Committee, said on CBS. "This is not an option. This is not, frankly, the Bush administration, where they're going to issue a signing statement and refuse to enforce it. They will enforce it."
Sen. Richard Shelby, the ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, said the compensation provisions were necessary to protect taxpayer money.
Of Gibbs' comments about the provisions and their enforcement, he told CBS, "It seemed to me that he was waffling a little bit." "This provision in the stimulus bill is going in the right direction," he said.
Treasury Secretary Timothy Geithner and White House economic aide Lawrence Summers failed to stop Senate banking committee chairman Chris Dodd, D-Conn., from adding to the stimulus bill stricter limits on bankers' bonuses than the White House wanted.
Dodd argued that the restrictions were critical to gaining public support for more funding for the ailing financial sector, saying that the perception that executives were getting rich on bailout money would be an impediment.
Under the administration's proposal, compensation restrictions applied only to banks that receive "exceptional assistance" from the government.
Top executives could be paid no more than $500,000, with bonuses or other compensation coming as stock that could only be claimed after the federal money had been paid back.
The bill passed by Congress set executive bonus limits on all banks that receive bailout money.
The amount of assistance will determine the number of executives affected, though top executives will be prohibited from getting bonuses or incentives except as restricted stock that vests only after bailout funds are repaid.
Amounts also can be no greater than one-third of the executive's annual compensation.
The prohibition would not apply to bonuses that are spelled out in an executive's contract signed before Feb. 11, 2009.
At banks that received $25 million or less -- typically small banks -- the bonus restriction would apply only to the highest-paid executives.
At banks that receive $500 million or more, all senior executives and at least 20 of the next most highly compensated employees would fall under the bonus limits.
The White House noted Sunday that the administration sought the strictest restrictions on executive pay, but wanted pay limited to $500,000 in cash, with the rest coming from restricted stock; Congress' bill doesn't have an absolute cash limit.
Officials also said they successfully asked Congress to include White House proposals on luxury expenditures and small banks' bonuses.