European Parliament members Tuesday night voted overwhelmingly in favor of capping short-term bonuses, by a vote of 625 – 28. EU finance ministers are expected to finalize the rules next week, and they should go into effect starting Jan. 2011.
The new legislation caps CEO bonuses at 30 percent – requiring banks to hold the remaining 70 percent unless they perform well for the year. Bonuses deemed “particularly large” will be capped at 20 percent, leaving it up to European governments to decide what “particularly large” means.
The law passed as Europeans express outrage at bank executives who used government bailout money to pay themselves enormous bonuses – similar to how American CEO’s continue to use taxpayer money to pay themselves multi-million-dollar bonuses.
Congress has considered a similar cap on American CEO’s, but Republicans argue that any cap like this would usher in a new era of socialism; and Democrats are too scared and incompetent to stand up for what they believe in.