At the beginning of 2009, the president of the United States Barack Obama, set a $500,000 annual compensation cap for executives at companies who are getting taxpayer bailouts to stop them from going bankrupt. He thinks excessive compensation is one of the main reasons of the economical crisis and in order to revive the economy, he will now lay down clear conditions about the executive compensation. Restrictions on golden parachutes and greater say to shareholders over the wages and bonuses of company chiefs are two of the main new rules.
In the short term the new regulation imposes that only companies who have received bailout money agree to stricter oversight and prove they have already applied the established rules on executive compensation. In the long term these rules will not only count for companies who receive government funds but for all public financial institution.
Nathan
Reuters
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