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Washingtons New Limits on Executive Compensation

February 18, 2009

By Mark Poerio

In last weeks stimulus legislation that the President just signed, a mere ten pages address executive compensation. They nonetheless impose dramatic restrictions. This alert describes these restrictions and recommends actions employers should now take to implement them, whether or not they are participating in the Treasury Departments Troubled Asset Relief Program (TARP).

Immediate action is critical for all TARP recipients, because the new restrictions apply immediately, notably imposing limits on how much TARP recipients may pay certain executives as bonus and severance. Employers that are outside the TARP face less onerous and more indirect issues, but they should take actions right away to best position their executive compensation disclosures for public scrutiny.