WASHINGTON — The administration plans to limit pay to $500,000 a year for executives of government-assisted financial institutions in a new get-tough approach to bankers and Wall Street, a senior administration official said Tuesday night.
President Obama plans to announce the limits today at the White House with Treasury Secretary Timothy F. Geithner.
An administration official familiar with the new restrictions said they would apply only to struggling large firms that receive "exceptional assistance" in the future. They would not apply to healthy banks that receive government infusions of capital.
The official, speaking on condition of anonymity because the plan had not yet been made public, said firms that want to pay executives above the $500,000 threshold would have to compensate them with stock that could not be sold or liquidated until the government was repaid.
Firms that receive capital infusions, but are considered healthy, could waive the restrictions. But they would have to disclose the compensation and submit the pay plan to shareholders for a nonbinding vote. The administration also will propose restrictions for companies that don't receive assistance, the official said, including requiring top executives at financial institutions to hold stock for several years.