Economic Stimulus Act Establishes New Executive Compensation and Governance Standards for TARP Recipients

Economic Stimulus Act Establishes New Executive Compensation and Governance Standards for TARP Recipients

News
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (Recovery Act). The Recovery Act contains new rules regarding executive compensation and governance applicable to all recipients of financial assistance under the Troubled Asset Relief Program (TARP) established by the Emergency Economic Stabilization Act of 2008 (Stabilization Act), including recipients of assistance before the enactment of the Recovery Act. In general, these rules apply to any TARP recipient throughout the period in which any obligation arising from financial assistance provided under TARP is outstanding (not including any period during which the government only holds warrants issued by the TARP recipient). The Recovery Act provides for the Secretary of the Treasury to promulgate rules implementing the executive compensation and governance provisions. According to press reports, the Obama administration has expressed concerns about aspects of the provisions, which the Secretary may seek to address in the implementing regulations. For more on the American Recovery and Reinvestment Act, see our recent Email Alert.