World Revisions Executive Remuneration
The scandal that American International Group brought to America has created so much panic in other parts of the world.
After an intense debate these past few weeks regarding the $165 million bonuses on AIG executives, the House passed a resolution to recoup almost everything by imposing 90% tax on them.
Prior to that, the public went crazy as the bail-out money that they provided to the insurance giant as taxpayers were just being showered to the people who almost brought the company down.
Now, even other countries are taking precautionary measures on the executive bonuses and compensations.
In France, a plan of limiting executive bonuses is brewing in the Parliament. According to the ruling party UMP, they plan to limit this excess or extra compensation in forms of shares or stock options.
Executives at Societe Generale have taken initiative to renounce stock options that they awarded to themselves, a move that not only favored by the public but also a timely gesture especially in today’s global financial crisis.
While France’s proposal on executive bonuses is taking its shape; in Sweden, total ban on this type of bonuses have already gained ground. But this prohibition is only restricted to state-owned companies.
Under this new wage guidelines, executives of all government owned companies will have fixed remuneration like most employees.
Along side this, a discussion with big corporate stockholders regarding the reassessing of executive pays and bonuses in their companies are starting anew.
Few months ago, the Netherlands imposed new tax schemes on high earner’s bonuses. A 30% tax was imposed to those who earn €500,000 or more a year and another 15%, for the same salary bracket, for executives’ pension payouts. And on top of that, taxes were also raised on hedge funds and private equities managers’ earnings for up to 25%.
The revisions of programs and policies regarding incentives and compensation are now being embraced worldwide for (or against) executives and bankers.
Although these, resolutions regarding compensation, don’t solve a major part of global crisis, this is still an intelligent move to protect public interest.