US Congress Passes for Second Reading the Legislation Limiting Exec Pay
The Congress has now passed to the US Senate the legislation that would put a limit to the high pay that company executives were receiving.
The said bill would prohibit large financial institutions such as banks to give incentive-based pay bonus package to company high-ranking officials if it induced excessive risk.
The US House of Representatives on Friday has advanced to Senate the legislation limiting high, risky pay bonuses to company executives. The said bill would prohibit large financial institutions such as banks to give incentive-based pay bonus package to company high-ranking officials if it induced excessive risk.
The legislation, which was earlier pushed by President Barack Obama, would give shareholders of public companies to vote (nonbiding) annually on executive pay packages, which give them more control on how the said bonuses be distributed.
However, companies with assets less than $1 billion were exempted from the said legislation.
A new standard of independence, based on the legislation, would be required from the companies and its management for compensation consultants and committees.
But several members of the Congress expressed fear that the Senate might block the said legislation and that the future of the bill would be uncertain. They are now implementing measures to raise the awareness of fellow lawmakers in Washington.
The limitless bonuses to company executives have been a perennial problem to the companies in the US and corporate world.
Analysts said that the recent passing of the bill was part of the Obama-administration’s move to tighten bank and capital market oversight as the US fights back amid recession.
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