Close loopholes in the corporate tax deductibility of CEO pay

Obama talks about compensation, but not much action

Updated: Tuesday, December 22nd, 2009 | By Angie Drobnic Holan

Barack Obama said during the campaign that he would look at revamping how the government defines compensation, particularly nonsalary compensation. That might include bonuses, stock options, shares or any other benefit.

We should state upfront that the financial landscape has changed dramatically since Obama made this promise prior to the broad economic collapse of October 2008. The government intervened to prop up several companies that might have collapsed otherwise. Afterward, the government said it would dictate executive pay for the handful of rescued firms, which include Citigroup, Bank of America, AIG, General Motors and Chrysler. That process is ongoing, and some companies are moving to pay back the money so they don't have to submit to pay limits.

Congress is also considering major legislation that would regulate the financial sector. The legislation includes "say on pay" provisions that would give shareholders a vote on executive compensation. But the vote would be nonbinding.

Obama has said several times he thinks Wall Street firms need to be mindful of inappropriate compensation during a time when many Americans face economic hardship. But we don't see evidence that has translated into new rules for CEO pay, particularly nonsalary compensation. It was not part of his tax proposals outlined for the fiscal year 2010 budget. So we rate this promise Stalled.

Sources:

U.S. Treasury Department, " General Explanations of the Administration's Fiscal Year 2010 Proposals ," May 2009

Thomas, HR 4713 , accessed Dec. 21, 2009

The New York Times, Topics: Kenneth R. Feinberg (special pay master for rescued firms)

The Wall Street Journal, It's Time to Level the Paying Field (op-ed), Dec. 16, 2009

CNN Money, Obama talks tough on executive pay , Feb. 4, 2009

PBS Newshour, Obama: Banks must lend more to help the economy , Dec. 14, 2009