Dear Mr. Baker:
Thank you for contacting me regarding your concerns about legislative efforts to curb excessive executive compensation. It is good to hear from you.
Concern about shareholder value, corporate governance, and the escalating pay for corporate executives has led to a strong debate surrounding compensation. News that recipients of federal assistance through the Troubled Asset Relief Program (TARP), like American International Group, provided millionsof dollars in bonuses exacerbated frustrations with corporate compensation practices around the country.
In response to these developments in March,legislative solutions to the problem wereproposed in Congress. The Compensation Fairness Act of 2009, S. 651, was introduced in the Senate to impose an excise tax on bonuses distributed by a company after receiving federal assistance to be paid by both the employer and bonus recipient. The House of Representativesconsidered and passed a measure that would impose an income tax at 90% of the bonus on the recipient. I have concerns about theunintended consequences of this legislation and who may be impacted. You will be happy to know, at this point, neither proposal has a timeline established for further consideration by the Senate.
I will continue to monitor this issue closely, andwork to make certain that all institutions and companies who receive federal assistance use those funds appropriately. But I will also make sure my colleagues understand the real worldramifications of these legislative proposals.
Should any legislation be brought before the full Senate dealing with extravagant bonuses issued by companies receiving federal assistance, please know I will keep your views in mind. Again, I appreciate your thoughts on this issue. Please don't hesitate to contact me again in the future
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