Summary: Fed & Treasury Pitch Pay Rules, But Will They Work

The article "Fed & Treasury Pitch Pay Rules, But Will They Work?" focuses on new plans the Fed and the Treasury Department have put in place to manage high level executive's pay. The Fed's proposal requires the agency to tell the bank holding companies just how they plan on assessing their pay practices. This will ensure that bonuses and other incentives don't encourage bankers to take more risk and put banks in further jeopardy. However, the Fed's new plan does not contain any hard-and-fast rules because they figure every company is different and their pay practices should reflect that. The Treasury's new plan focuses mainly on the top echelon of the corporate hierarchy (top 5 executives and 20 other highest paid employees). Another element of the Treasury's plan centers on trading cash salary for stock and also replacing bonuses with restricted stock. This will encourage top executives to "shoot for the stars". In order to keep stock issued as a bonus, executives will have to stay with the company for three years and they won't be able to cash the stock until the government is paid back.