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Goldman, JPMorgan Wont Feel Effects of Executive-Salary Caps
Key Excerpts from Article on Website of Bloomberg News
Posted: February 15th, 2009
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=a...
Executives at Goldman Sachs Group Inc., JPMorgan Chase & Co. and hundreds of financial institutions receiving federal aid arent likely to be affected by pay restrictions announced yesterday by President Barack Obama. The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need exceptional assistance in the future. The limits arent retroactive, meaning firms that have already taken government money wont be subject to the restrictions unless they have to come back for more. Pay caps may provide the political cover the administration needs to deliver additional infusions of capital into the financial sector. Obama ... is not proposing to go back and get that $18.4 billion in bonuses back, Laura Thatcher, head of law firm Alston & Birds executive compensation practice in Atlanta, said of the cash bonuses New York banks paid last year, the sixth-biggest haul in history. Right now, we have not clamped down on pay at banks. In addition, some executives may be compensated for the potential reduced salaries with restricted stock grants, which may result in huge paydays after the bank repays the government assistance with interest. Theyre just allowing companies to defer compensation, said Graef Crystal, a former compensation consultant. The restrictions are a joke, he said, because if the government is paid pack, you can be sure that the stock will have risen hugely.
Note: For many revealing reports from reliable sources on the realities behind the Wall Street bailout, click here.
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