Treasury Secretary Timothy Geithner says the Obama administration doesn’t want to place caps on executives’ pay — even though it believes excessive compensation led to risk-taking that contributed to the financial crisis.
OK, excessive pay packages costs taxpayers billions but the Obama administration is getting weak-kneed. So they want to pass the buck.
Geithner said the administration will seek legislation that will permit shareholders to vote on executive pay packages, but the results would not be binding on boards of directors.
So we’re going to pass legislation with no teeth in it. But there is at least a kernel of a new idea that might help.
Geithner said the shareholder measures, as well as legislation to keep corporate compensation committees independent from boards of directors, will reinforce pay guidelines that the administration released Wednesday.
What does independent from boards of directors mean? Who will select them, compensate them?
Finally, this brief article ends with this contradiction.
Those principles encourage corporate boards to adopt pay packages that reward long-term performance rather than short-term gains.
I thought the boards of directors wouldn’t be involved in pay packages. WTF?