House aims to limit bank salaries
CORRECTION: The original interview incorrectly described the Corporate Library. It is a business that tracks pay and other corporate issues for institutional investors. The text of the interview has been corrected.
TEXT OF INTERVIEW
Bill Radke: The House Financial Services Committee meets today, looking at ways to limit those banker salaries and bonuses. Marketplace’s John Dimsdale joins us live from Washington — good morning, John.
John Dimsdale: TGIF, Bill.
Radke: Thank you. What’s going to happen today?
Dimsdale: Well, this committee is going to hear from several advocates for government-imposed limits on the salaries of bank executives. It’s really a hearing perfectly timed — deliberately so — to grab some of the attention that these bonuses and bank earning statements are getting.
Radke: Yes, and what are some of the pay-cutting ideas?
Dimsdale: Well, one bill would do what Britain has done: impose a surtax on bonuses. Another idea is to give shareholders more of a say on corporate salaries. One of the people testifying today is Nell Minow of Corporate Library. It is a business that tracks pay and other corporate issues for institutional investors. And she’s going to push for giving shareholders more power to get rid of those directors who go along with the big bonuses.
Nell Minow: After all at the end of the day, it’s the Boards of Directors who designed and approved these pay plans. And if we can’t throw those guys out of office, then we’re just going to keep repeating the same problems.
Radke: John, how is the banking industry reacting to all of this?
Dimsdale: Well they say that they’ve already reformed their compensation plans. They’ve been tieing them to the performance of the bank, even allowing for some “clawbacks,” where the executive has to give back some salary if the company’s investments turn sour later on.
Radke: Marketplace’s John Dimsdale in Washington. Thanks, John.
Dimsdale: You’re welcome.
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