Democrats want to rein in rich exit packages and reclaim millions paid to bosses who piled up toxic mortgage assets. But it’s easier uttered than done

by Theo Francis

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As Congress and the Bush Administration negotiate over the terms of a financial rescue bill, Democrats on Capitol Hill are drafting language designed to restrain in executive compensation, in private polemical severance packages at foundering companies. And for politicians concerned about the growing backlash on Main Street over what many look to as a bailout of Wall Street fat cats, executive pay is a ripe target. After all, average total hire for a CEO at one of the 500 biggest companies finally year was $12.8 million, double the kind of it was a decade ago.

But compensation attorneys and experts say many of the restrictions could prove tough to set forth strongly.

Executive pay was shaping up for example one of a small in number remaining sticking points as Congress and the Republican Administration hurried to state a deal together amid further stock emporium declines on Sept. 22. In several areas the players were nearing quadrate, with Administration officials reportedly accepting some congressional oversight and relief for homeowners struggling to compensate their mortgages—clew provisions since Democrats.

Legislative language circulating on Capitol Hill put on Monday afternoon also included mechanisms that would give the government ownership stakes in companies benefiting from the bailout, to make up as far as concerns losses the government might incur. Senate Democrats revived a providing that would allow judges to modify the terms of mortgages in bankruptcy proceedings, much as other debts can be adjusted. But the financial-services industry is powerfully opposed to the provision and some predicted it would not garner sufficient bed in the House.

Treasury Secretary Henry Paulson was scheduled to appear before the Senate Banking Committee on Tuesday, Sept. 23, through Federal Reserve Chairman Ben Bernanke and Christopher Cox, chairman of the Securities & Exchange Commission. Lawmakers have said they hope to craft a deal by dint of. the end of the week, when Congress is slated to adjourn.

Although executive-pay restrictions received considerable attention publicly and in negotiations on the Hill, the delineation bills themselves included only short, vaguely worded sections that would require Treasury to limit pay and severance in quest of executives at companies from what one. it buys troubled assets, at the same time that giving the force wide carefulness over the details. Treasury Secretary Paulson, acknowledging that "there have been enormities" in executive pay that should exist addressed, has argued that the government’s primitive priority should have existence stabilizing the financial markets, with compensation curbs and other reforms to come later.

A Senate controversy draft would require the regulation to ban incitement payments that the agency considers "inappropriate or violent;" require executives to return incentives "based on earnings, gains, or other criteria that are later proven to be inaccurate;" and limit severance as "convenient to the public interest" and the assistance the company receives.

Language in a draft House bill was similar, applying the restrictions for two years following Treasury assistance. But it also imposed additional restrictions on at least some companies, banning severance pay as antidote to top executives and requiring the companies to make it easier for substantial shareholders to propose as a candidate and elect board members and for shareholders generally to hold advisory votes on executive compensation.

Capitol Hill staffers acknowledged that the measures were worded broadly and reported lawmakers want to give Treasury respectability it can actually use. "The goal is something that sends a unimpeded message of intention but is not necessarily bandage" on Treasury, common senior congressional aide said.

A variety of obstacles face the Treasury if it ultimately sets out hard to bear to enforce such provisions.