$500,000 Exec Salary Cap But…

CBS Evening News: Obama's New Rules Take Bite Out Of Bailout Company Exec Salaries - But It's Not Retroactive

(CBS)  For the country's troubled financial giants, the president laid out a new set of rules, CBS News correspondent Anthony Mason reports.

"What gets people upset, and rightly so, are executives being rewarded for failure," President Obama said.

So the government will cap senior executive salaries at $500,000 for any bank getting “exceptional assistance" from the government.

And any additional compensation would have to come in stock that can't be cashed in until taxpayers are paid back.

"We're going to be demanding some restraint in exchange for federal aid,"President Obama said.

But the stricter rules are not retroactive. They'll apply only to banks making new requests for help.

So they won't affect companies like Bank of America, which has already received $45 billion in bailout funds. Its CEO Ken Lewis earned more than $5 million in salary and cash bonuses in 2007 - and another $14 million in stock options and other income.

Nor will it affect Wells Fargo, which has received $25 billion in TARP money. Its CEO John Stumpf took home more than $11 million in salary, bonus and stock.

The president said the administration plans to investigate whether high salaries have "contributed to a reckless culture."

"Which could really put a damper on the executive pay orgy that has been going on in this country for far too long," said Neil Weinberg, Executive Editor of Forbes magazine.

In 1980, according to a Forbes study, executive compensation was 40 times the average workers pay. By 2007, that had soared to more than 400 times.

"As a result, this pay system has completely gone off the rails in this country and I think what the President is saying here is, 'We need to restore some sanity to the senior pay in this country,'" Weinberg said.

Could the financial companies have prevented this?

"Yes, I think they could have," said Jim Reda, an executive compensation consultant.

Reda went on to say that companies often find it difficult to reform themselves, “which is why sometimes you need an external whack. And what they did is they gave the bat to the president."

And the president made clear today that this was only his first swing. The administration is looking at broader reforms that could affect all CEOs.

[demsdebreaks]

Keeping their $500k jobs should be the ONLY bonus these guys get. Now if our Republican senators could just get off the dime and DO something to get the stimulus package passed, there might be hope for us all. The president is right. I voted for CHANGE. Democrats seem to have gotten the message. Republicans are still playing stalemate which means nothing gets done which they THINK means there will be nothing to blame them for. Newsflash: Rush Limbaugh is not in charge of this country. We may not shout and scream the way he does, but the overwhelming majority of Americans want the president to succeed. It means we ALL succeed, you moron...er, I mean, Mr. Limbaugh.

[maramara2]

President Obama, I am a Republican and I support this move 100 %

[kenkatz-2009]

Let the executives make as much money as they want on profits or MORE profits. No one should make a penny on a business losing money.

[beatoh01]

If the Wall Street CEO''s have any common sense at all, they will voluntarily agree to the proposed salary caps, whether they have to or not, at least until they have paid back all of the money given to them by the Treasury. To avoid them on a technicality would be to send the absolutely wrong message to Main Street. Call it an investment to restore public confidence for the future.