Himes, Lance Co-Sponsor Bipartisan Legislation to Tie Pay to Performance
WASHINGTON, DC—Representatives Jim Himes (D-CT) and Leonard Lance (R-NJ) joined colleagues to introduce practical legislation that will tie executive pay to performance at institutions in which the American taxpayers have ownership. Following last week’s vote that broadly addressed executive compensation, this bipartisan legislation takes a targeted approach to eliminate incentives that encourage executives to make risky decisions and threaten the company’s viability.
“We need regulation that aligns the public’s interest with the health of these institutions,” said Congressman Himes. “This is responsible legislation that will ensure accountability for taxpayers and shareholders while keeping employee pay a matter of measurable job performance rather than public opinion.”
The legislation requires that executive pay be based on performance standards and reduces incentives for decision-makers to take excessive risk at institutions that have received funding from the Troubled Assets Relief Program (TARP). The bill requires the Secretary of the Treasury to develop standards to measure both the performance of the employee and the stability of a financial institution, including its ability to repay the U.S. government for any investment, before paying bonuses.
“This legislation helps balance risk and reward in executive pay structures to encourage good performance through well-designed executive compensation systems,” Congressman Lance said. “Our bill is a practical, responsible, and bipartisan response to this issue.”
“Last week we sent a strong message to America that we would and could protect taxpayer dollars,” said Congressman Himes. “But the legislation I have cosponsored today applies appropriate oversight to companies the taxpayers own while keeping the sledgehammer away from the keyboard.”