$500,000 Exec Salary Cap But…
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.
