Bailout Bill Has Major Compensation Limits

Last Updated Oct 3, 2008 3:03 PM EDT

pay.JPGThe drama's still on as the $700 billion bailout goes to the U.S. House of Representatives today.

Worthy of note, however, is what the version passed by the Senate on Wednesday says about executive compensation.

In a nutshell, if the U.S. Department of the Treasury buys distressed assets at an auction from a firm that has sold more than $300,000 in assets, a bunch of restrictions kick in. These include:

  1. If an executive has a golden parachute and leaves the firm for any reason other than retirement, that golden parachute is levied a 20 percent excise tax.
  2. Tax deductions would be limited for compensation above $500,000.
Those are rather large twists in the Emergency Economic Stabilization Act of 2008 also known as H.R. 1424. Worth a peek.

(Image by ThomasHawk, via Flickr, CC 2.0)