G-20 Executive Compensation Reforms Could Harm Major TARP Recipients

September 29, 2009. Reforms to executive compensation proposed last week by the Group of 20 could, according to Morrison Cohen partner Colleen Westbrook, harm major banks who continue to hold TARP funds. According to an article appearing today on the Bloomberg.com news service, the G-20 reforms were endorsed in the belief that they would increase financial stability by limiting excessive risk-taking by executives. The reforms include limiting the guarantees bankers receive for moving from one firm to another to one year and requiring senior executives and others, such as traders, who may have a material impact on risk-taking activities to have a significant portion of their compensation deferred over 1 to 3 years. The article quoted Ms. Westbrook, an executive compensation partner at the firm, saying that, compared to institutions that have been freed of the TARP restraints, "limiting guarantees to one year could hurt banks like Citigroup and Bank of America by putting them at another disadvantage in hiring." The full article can be found at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=av0Tkl_Q_pro.
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