Obama to restrict pay of bail-out bosses

President Barack Obama today vowed to restrict the pay of Wall Street bosses who seek bail-out cash from the state.

Chief executives will face a salary ceiling of $500,000 a year – a fraction of the millions they usually receive – if they call for taxpayers’ support, the President said.

He also vowed to clamp down on “disgusting” severance packages, “taking the air out of the golden parachute”, he added.

It comes amid growing criticism of executive excess at a time when many firms are going cap in hand to the government for a financial bail-out.

Last week, a report found that Wall Street firms paid $18.4bn in cash bonuses during 2008 – the sixth largest bonus year on record.

Meanwhile it emerged that the outgoing boss of Merrill Lynch, John Thain, spent $1.2m redecorating his office. Mr Thain has since said he will repay the money.

Such revelations have drawn widespread criticism, coming as the number of people being made unemployed rises daily.

Speaking today, Mr Obama said: “What gets people upset – and rightfully so - are executives being rewarded for failure. Especially when those rewards are subsidised by US taxpayers.”

“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste – it is a bad strategy – and I will not tolerate it as President.

“We are going to be demanding some restraint in exchange for federal aid – so that when firms seek new federal dollars, we won’t find them up to the same old tricks.”

As such, firms that receive bail-out money will be forced to limit pay to $500,000. Packages can be bumped up through stock – but it won’t be able to be taken until after the state is paid back in full from the company.

In addition, firms receiving federal aid will be forced to disclose and justify all perks and luxuries bestowed on senior members of staff.

“We are putting a stop to these kinds of massive severance packages we have all read about with disgust. We are taking the air out of the golden parachute,” Mr Obama said.