WASHINGTON, Dec. 15 (UPI) -- A last-minute insertion into the $700 billion U.S. bailout package may allow corporate executives to avoid restrictions on pay packages, a senator said.
Congressional aides said the Bush administration insisted on tying the restrictions on executive compensation to companies that sold assets to the government in an auction. However, none of the $335 billion given out so far has been distributed that way, The Washington Post reported Monday.
The U.S. Treasury switched tactics to buying equity after the act became law.
"The flimsy executive-compensation restrictions in the original bill are now all but gone," said Sen. Charles E. Grassley, R-Iowa.
The Emergency Economic Stability Act of 2008 included provisions for executives to return bonuses based on goals that did not materialize and a provision that eliminated huge severance packages for executives when they were replaced, rather than fired.
The most critical component, some say, is a ban on companies claiming more than $500,000 in tax deductions from pay given to their top five executives.
The Treasury may rewrite the rules but that may not work, given it would be changing the rules after firms had already accepted the bailout funds, the Post said.
