Treasury secretary, Timothy Geithner, said on Wednesday the government is not trying to cap executive pay following the proposals it made on pay packages.
Geithner said the Obama administration wants to give the Securities and Exchange Commission power to give shareholders a stronger say over executive pay.
Geithner said the administration sought to limit pay practices that encourage excessive risk taking. He said many are the cases where “compensation committees were not sufficiently independent of management while companies were not fully transparent in explaining their compensation packages to shareholders.”
The secretary stressed, “We are not capping pay. We are not setting forth precise prescriptions for how companies should set compensation, which can often be counterproductive.”
He said the administration would continue develop standards that instead develop standards that reward innovation and prudent risk-taking, without creating misaligned incentives.