First Coast Faces Proposed Cuts, Too; Analysts Suspect Federal Regulation Will Affect Pay across the Banking Industry
Bauerlein, David, The Florida Times Union
Byline: DAVID BAUERLEIN
A federal clampdown on compensation for top banking executives could ripple through those companies and curb the pay of lower-ranking executives in regional financial centers like Jacksonville, according to executive compensation consultants.
With support from President Bush, Congress has been crafting legislation that would limit pay for the top-ranking executives at firms that get assistance from a bailout for struggling banks.
The proposed limits appear to be aimed at the handful of executives who are named on filings with the federal Securities and Exchange Commission. Some proposals have said executives shouldn't get more than the president's salary of $400,000.
Reducing pay at the top "could cascade down so that people who are earning 50 percent of what the CEO makes could see their pay cut, or they might be left alone," said Pearl Meyer, senior managing director of Steven Hall & Partners, a New York-based company that advises boards on executive compensation.
EFFECTS ACROSS THE INDUSTRY
James Reda, managing director of James F. Reda and Associates in New York City, said Thursday it's possible cutting compensation for the highest-paid executives will free up money for other executives.
"But I doubt it because people have a way of sharing the pain," he said.
He said the federal regulation also could affect pay levels throughout the banking industry, even at firms that don't seek assistance from the government, because the federal limit will establish a benchmark. As a result, executives who are advancing in their careers could find it harder to get big pay bumps as they win promotions.
Limiting executive compensation wasn't part of the Bush administration's original package for rescuing troubled financial institutions. …