Treasury limits bonuses at TARP recipients - Memphis Business Journal:

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The new rules encourage those companie s to award executives stock that must be held for a long perioddand can’t be entirely converted to cash until the TARP moneu is repaid to the That, the department contends, will align “executives’ incentives with those of shareholderse and taxpayers.” Kenneth Feinberg, a mediator who led the Septembert 11th Victim Compensation Fund, will reviewe payments and compensation plansw at companies that have received “exceptional assistance.” The grou includes Charlotte-based BofA (NYSE:BAC) as well as , , , Financial Services and .
TARP recipients also must allow shareholders to vote on executive compensation And they must disclose any perks worth morethan $25,000 made to highlgy compensated employees and justify the benefit. The rules prohibigt companies fromproviding “gross-up” paymentws to senior executives to cover taxeds due on perks. Treasurh Secretary Tim Geithner says the Obamaw administration also supports legislation that would require all public companiew to give shareholders a nonbinding vote on executivrecompensation packages.
In addition, he says Congress should give the Securities and Exchange Commissiobn the power to make compensation committeesmore independent, similar to the standardxs in place for audit committee s established by the Sarbanes-Oxley Act. Geithne r blames executive compensation practices asa “contributing factor” for the financiak crisis. “Incentives for short-terj gains overwhelmed the checks and balances meant to mitigate against the risk ofexcessz leverage,” he says. But, he adds, “We are not cappingb pay. We are not setting forth precise prescriptions for how companiee shouldset compensation, whichy can often be counterproductive.
Instead, we will continue to work to developo standards that reward innovationb andprudent risk-taking, without creating misalignedr incentives.”