Obama gets tough on executives, Republicans

President Obama sent a clear message to corporate executives and Republicans opposing his stimulus plan — he’s in charge.

In sternly worded remarks from the Grand Foyer of the White House Wednesday morning, Obama decried excessive executive bonuses and severance packages as “the height of irresponsibility,” and he announced that he is capping compensation for executives who receive “extraordinary help” from the federal government at $500,000.

{mosads}”For top executives to award themselves these kinds of compensation pacakages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said.

Furthermore, additional bonuses can only come in the form of stock that can’t be cashed in until taxpayer assistance is repaid, and companies receiving help will have to disclose all their “perks and luxuries.”

“We’re taking the air out of the golden parachute,” Obama said.

The president also sent notice to Republicans on Capitol Hill that they should act quickly on his stimulus package, saying that he has “heard the criticisms of this plan that echo the very same failed theories that helped lead us into this crisis — the notion that tax cuts alone will solve all our problems.”

“I reject that theory, and so did the American people when they went to the polls in November and voted resoundingly for change,” the president said.

The restrictions divide the government help into companies receiving “exceptional assistance” and those receiving “generally available” help. The White House says the second group is made up of banks receiving money from the $250 billion Capital Purchase Program that is part of the $700 billion financial rescue program passed by Congress in October.

The new restrictions limit companies that receive “exceptional assistance” from paying their CEOs more than $500,000. CEOs could also be paid in restricted stock that is aimed at a “long-term” incentive structure whereby the executives could only be paid once the government has been repaid for its investment. The restrictions also beef up clawback provisions that apply to executives who have engaged in deceptive practices. The provisions would apply to the top 25 officials, rather than the top 5.

Senior executives at companies receiving “generally available” help would be limited to $500,000 in annual compensation and restricted stock, unless the provision is waived by public disclosure and a shareholder vote.

The new restrictions for the second type of company will not apply retroactively to existing investments.  

— Silla Brush contributed to this article.

— This article was updated at 12:08 p.m.