White House caps executive pay

WASHINGTON, Feb. 4 (UPI) -- The White House Wednesday set new limits on executive pay for companies that receive federal bailout funds.

The pay cap, with different rules for firms requiring "exceptional assistance" and those accepting "generally available capital," is set at $500,000 a year with the exception of restricted stock that could not be vested until the federal funds are paid back, the White House said.

President Barack Obama said the lavish pay for financial firms "in the midst of this economic crisis is not only in bad taste, it's a bad strategy."

The policy is "designed to strengthen the public trust," Treasury Secretary Timothy Geithner said.

Companies that receive general assistance can top the limit, but only with a non-binding shareholder vote and full public disclosure of compensation, the White House said.

The rules also extend the ban on golden parachutes beyond the top five executives to the top 20 and clawback provisions, allowing companies to reclaim bonuses given to executives later found to have earned the bonuses deceptively.

The prohibitions extend further for firms receiving "exceptional assistance."

The pay cap previously held that firms could not receive tax deductions for salaries over $500,000, but now strictly prohibits such pay, the White House said.