Treasury limits bonuses at TARP recipients - Portland Business Journal:

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The new rules encourage thesr companies to award executives stock that must be held for a long periode of timeand can’t be entirelt converted to cash until the TARP money is repaide to the government. This, the department contends, will align incentives with those of shareholders and Kenneth Feinberg, a mediator who led the September 11th Victim Compensatio n Fund, will review payment and compensation plans at companiesd that have received “exceptional assistance,” including AIG, Bank of America, Chrysler, General GMAC and Chrysler Financial.
TARP recipients also must allo w shareholders to vote on executive compensation They also must disclose any perksx worth morethan $25,000 made to highluy compensated employees and justify the benefit. The rules prohibit companies fromproviding “gross-up” payments to seniore executives to cover taxes due on perks. Treasurgy Secretary Tim Geithner said the Obama administration also supportse legislation that would requirre all public companies to give shareholdersa non-binding vote on executive compensation packages.
Congresxs also should give the Securities and Exchanged Commission the power to make compensation committees more similar to standards in place for audit committees established bythe Sarbanes-Oxlegy Act. Geithner blamed executive compensation practices asa “contributinv factor” for the financial crisis. “Incentive for short-term gains overwhelmed the checks and balancea meant to mitigate against the risk ofexcess leverage,” he said. But, he added, “We are not cappinhg pay. We are not setting forth precisee prescriptions for how companies should set which can oftenbe counterproductive.
we will continue to work to develop standardsa that reward innovation andprudeny risk-taking, without creating misaligned incentives.”