The financial community is slowly responding to the prospect of a 2008 bonus clawback for TARP recipients.
Banks and financial institutions that took TARP money in 2008 now fear that congress will retroactively demand excess compensation be returned to the US Treasury for 2008. Unfortunately the worst abuses haven't been widely publicized yet...
Opinion: Sink Your Claw(back)s Into This
I don't blame execs for taking what they can...That's just human nature.
The author is against clawback of 2008 Bonuses by out of control bankers... but goes on to say we should be more outraged by restricted share grants which is how financial executives supplemented their enormous salaries year after year while running our public financal infrastructure into the ground.
I can't agree with much in the article except for that last part:
...restricted share grants seem even more offensive to the senses than bonuses taken years ago given that they have been delivered after it is so obvious that what "the brightest guys in the room" did in 2005 was actually destructive to both shareholder value and the nation's financial system.
The author uses Goldman as an example. The author has multiple weird defenses of why we should not clawback anything which totally misses the point, but in any event the example below explains restricted compensation.
In an illustration of just how deeply embedded the concept of compensation without responsibility is on Wall Street, the big names at Goldman just received collective tax-free compensation valued at $29.1 million for the bang-up job they did in 2005 and other previous years.
The compensation was in the form of restricted shares issued to the group on January 13. The 11 top executives received a total of 733,424 shares, valued at just shy of $50 million given the stock price on the day. A total of 273,111 shares were immediately sold, however, to account for individual taxes owed on the grants. Hence, a tax-free total take of $29.1 million for the group.
For me that seals it. Put ALL clawbacks on the table for 2008.
I can't think of a better reason to demand massive clawbacks for TARP propped up companies than "the boards won't over see themselves."
Restricted compensation payouts to executives coupled with bad management should be in no way be rewarded. Bad behavior has bankrupted our financial system. Urge Claire McCaskill to amend her bill to include ALL 2008 clawbacks for 2008 bonuses and restricted compensation payouts.