Bad news for high rollers: the President says he and his Treasury Secretary agree that companies receiving TARP funds from the Feds will be instructed to cap executive compensation at half a million dollars. That’s half a million per exec, not half a million total.
Obama had previously expressed his displeasure with the large bonuses recently given by firms, especially those on government assistance, a displeasure which is apparently shared by a large percentage of Americans, so this move will likely be popular. But is it legal? Business law site The Conglomerate suggests that it is: “Though the TARP exec comp provision contemplated asset purchases (which the government never did), it indicates that companies in which the government takes an equity position shall be subject to ‘appropriate’ limitations, which grants a lot of discretion to Treasury…”
Even rightwingers are mostly reduced to the Oh Yeah What About defense: Michelle Malkin asks Oh Yeah What About executives of Fannie Mae and Freddie Mac (though top officers at Fannie Mae, at least, already get less than half a mil apiece), and Jammie Wearing Fool asks Oh Yeah What About Hollywood executives, though they are not part of the TARP.
Riehl World View believes the cap is “the best way to ensure they get the weakest managers of the bunch,” and part of Obama’s plan “to take near complete control of America and American lives.” “And what about the top-flight Wall Streeters?” agrees RedState. “These are the guys people are talking about when they say that you need to pay people lavishly if you want to keep them.”
Half Sigma spots a loophole: Bailed-out execs “can receive stock grants which vest after the government is paid back. So they can still receive millions of dollars a year anyway.”