Geithner says shareholders need say in executive pay

By Glenn Somerville and Karey Wutkowski
WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Wednesday the Obama administration wants Congress to pass new laws giving securities regulators power to force companies to let shareholders have more say in setting executive pay levels.
The administration also was expected to name a "pay czar" who would have authority to reject compensation plans for top employees at companies getting "exceptional" government aid, a administration official said.
Pay packets for executives that sometimes are several hundred times what average employees earn have angered the public since the U.S. Treasury began pumping hundreds of billions of taxpayers' dollars into banks to keep them afloat.
Geithner said Treasury wants Congress to pass two specific pieces of legislation. One would give the SEC authority to oblige companies to give shareholders a non-binding vote on pay packages for top executives.
The other legislative proposal that he said Treasury will offer is to give the SEC power to ensure that internal pay committees, which set pay levels and perks company leaders, are more independent from management.
WAITING FOR CZAR
Geithner met SEC Chairwoman Mary Schapiro, Federal Reserve Governor Daniel Tarullo and pay experts at Treasury before speaking briefly to reporters. At Schapiro's side sat Kenneth Feinberg, who sources had indicated will be named pay czar.
The pay czar, or "special master," will review compensation structures for the top 100 salaried employees of firms receiving exceptional assistance, such as Bank of America, Citigroup and insurer AIG, the official said.
Feinberg, a respected Washington lawyer, oversaw the government's compensation to the survivors of the September 11, 2001, terror attacks.
Geithner has said previously that Wall Street compensation practices became "divorced from reality" in the period before a severe financial crisis set in that helped drive the U.S. and much of the global economy into a recession that continues today.
The U.S. Treasury chief said the administration's intent was not to set pay caps, but to link compensation more closely to a company's financial performance and to sound long-term direction of companies. "We will continue to work to develop standards that reward innovation and prudent risk-taking, without creating misaligned incentives," Geithner said.
He added that pay rules for firms that getting federal bailout money were coming "relatively soon."
RULES IN FLUX
Schapiro told reporters that her agency's rules on compensation were "very much in flux still" but said they would not dictate particular compensation levels for corporate executives.
President Barack Obama has argued that pay structures at financial firms encouraged excessive risk-taking, sowing the seeds of a financial crisis that drove the United States and many other countries around the globe into recession. Continued...
Source: Reuters