Well, he warned us. But now that it’s here it sounds so incredible.
Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance [from the various US government bailouts] will have to cut the cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.
And for all executives the total compensation, which includes bonuses, will drop, on average, by about 50 percent.
* * *
And at all of the companies, any executive seeking more than $25,000 in special perks — like country club memberships, private planes, limousines or company issued cars — will have to apply to the government for permission.
I eagerly await David Zaring’s explanation of the actual mechanism for this, assuming anyone knows what it is. Did the companies sign contracts accepting such oversight and control when they accepted TARP funds, even though I don’t think TARP came with these kinds of compensation restrictions? Did ARRA effectively alter TARP agreements? If so, how?
Marc Hodak, as always, is on the compensation issue.
Anyway, have no fear. Pay Czar Feinberg knows best. Da, comrade.