Congress debates compensation
By Cydney Posner
You might be interested in this article from the NYT reporting on the "ideological clash" at a hearing before the House Financial Services Committee during which lawmakers debated whether executive pay should be curbed at all companies, not just those receiving federal money.
The article reports that Barney Frank of Massachusetts, the chairman of the committee, urged the committee to come up with a bill that would alter the structure of executive pay before the Congressional summer recess: " 'I believe the structure of compensation is flawed,' Mr. Frank said. 'Namely, we have had a system of compensation for top decision makers in which they are very well rewarded if they take a risk that pays off but suffer no penalty if they take a risk that costs the company money.' " Many Republicans on the committee "generally said they approved setting compensation limits on those companies that took money under the Troubled Asset Relief Program, [but] they stopped short of supporting legislation that would broadly change corporate governance practices." The White House has previously stated that the administration does not want to cap executive pay. Gene Sperling, counselor to the Treasury secretary, said that although "Wall Street may be the focus of the pay debate right now,...the problem was much wider. 'While the financial sector has been at the center of this issue, we believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry,' Mr. Sperling said."