U.S. Treasury Secretary Timothy Geithner has said bankers should be paid largely in stock that is tied to long-term performance of their companies and subject to being rescinded if financial gains prove short-lived. “You want compensation to come substantially in the form of equity in the firm that vests over time, that is at risk, that can be clawed back if returns don’t materialize,” Geithner said in a town hall meeting yesterday. “You’re seeing some initial signs of change in that direction.” Earlier, Geithner said in congressional testimony that the government is shifting to a “repairing and rebuilding” phase after “rescuing” markets and the economy, said Bloomberg. The next steps should include giving regulators “better tools to respond to future crises,” he said. Geithner said the U.S. financial system is “dramatically better” than it was at the height of the crisis, even though it has not yet fully recovered. He also said the Treasury Department is so far getting a favorable return on its investments in banks through the $700 billion Troubled Asset Relief Program.
Geithner Calls for Bankers to be Paid in Equity With Clawback Option
“You want compensation to come substantially in the form of equity in the firm that vests over time, that is at risk, that can be clawed back if returns don’t materialize,” Geithner said.
September 11, 2009