The recent Washington Post article and related commentary notwithstanding, Senator Robert Menendez just sidestepped and dodged a rather pointed question about the stronger restrictions on executive compensation that appear in the February 10th draft text of the Senate Bill we highlighted yesterday. CNBC being spineless, there was no real follow-up to Menendez' "bonuses sap the confidence of the American people" dodge.
Update: The House markup has, indeed, zapped the literal salary cap in favor of this language:
STANDARDS REQUIRED.--The Secretary
shall require each TARP recipient to meet appropriate standards for executive compensation.
[Read: You are Geithner's bitch.]
SPECIFIC REQUIREMENTS.--The standards established under paragraph (2) shall include the following:
Limits on compensation that exclude incentives for senior executive officers of the TARP recipient to take unnecessary and excessive risks that threaten the value of such recipient during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding.
A prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding, except that any prohibition developed under this paragraph shall not apply to the payment of long-term restricted stock by such TARP recipient, provided that such long-term restricted stock--
(I) does not fully vest during the period in which any obligation arising from financial assistance provided to that TARP recipient remains outstanding;
(II) has a value in an amount that is not greater than 1/3 of the total amount of annual compensation of the employee receiving the stock; and
(III) is subject to such other terms and conditions as the Secretary may determine is in the public interest.
What follows is a sliding scale that applies the restriction to the "Senior executive officers and at least the top [x] most-highly compensated employees, or such higher number as the Secretary may determine is in the public interest...." where "x" is a number from 1 to 20.
Alarming here is the power the Secretary has to impose whatever restrictions he feels is "in the public interest." Ouch.