WASHINGTON — The executive compensation guidelines President Obama released Wednesday allow the new administration to claim it is cracking down on financial firms receiving government help, but the changes are unlikely to have much impact.

The guidelines will not apply to any institution that has already received help — including Citigroup Inc., Bank of America Corp., and American International Group Inc. — and will apply going forward only to companies that get "exceptional assistance."

"It's much ado about nothing," said Brian Gardner, a political analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc.

But some observers said keeping the scope narrow was smart because overly restrictive compensation limits could have started a chain reaction that hurt the economy.

"It shows that the White House is being realistic," said Chris Low, the chief economist at First Horizon National Corp.'s FTN Financial Capital Markets. "They've weighed the options and decided that" tighter restrictions "would do more harm than good to the financial system and U.S. competitiveness in that system."

The guidelines cap pay at $500,000 for senior executives at institutions receiving extraordinary assistance, which the Treasury Department did not define but said would include the type of help given to Citi and B of A. Any compensation above that level must be paid in the form of restricted stock that vests only after the company has repaid the government.

Perhaps the weakest provisions apply to companies that get Troubled Asset Relief Program, or Tarp, funds in the future. They would face the same $500,000 executive compensation limitation but could get around it merely by publicly disclosing the higher pay and putting it to a shareholder vote. The vote, however, would not be binding. So a company could pay its executives more than $500,000 even if the shareholders rejected it — as long as it disclosed the amounts.

All companies that get government aid in the future — whether "exceptional" or not — would have to adopt procedures for reclaiming payments to the top 25 executives if they are found to have knowingly provided false information. Current clawback provisions only apply to the top five executives.

Golden parachute payments could not exceed one year's compensation for the top five executives, and boards would be required to adopt policies related to luxury expenditures.

President Obama touted the guidelines during a press conference Wednesday, saying bankers have engaged in "shameful" behavior.

"For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste — it's a bad strategy, and I will not tolerate it as president," he said.

Sources viewed the move Wednesday as spade work for next week when the Treasury Department is scheduled to unveil the next phase of the financial sector's rescue. "They're trying to sell this whole thing," said Oliver Ireland, a partner at Morrison & Foerster LLP. "They're trying to make sure that the program that the Treasury is putting together to bail these banks out is politically palatable."

Many faulted the Treasury for not defining the term "senior executive" and apparently leaving out a large pool of influential employees, such as traders.

"It doesn't cover all of the right people," said Mark Flannery, banking chairman at the University of Florida. "There seems to be a very serious problem with the people who are making deals, in how they are compensated … . There are a lot of decisions made at the trader level not covered by these regulations."

FTN's Mr. Low agreed.

"The way these rules are written, most of the Street gets a free pass," he said. "I believe that's because they realized restrictions any more onerous than this are going to cause a lot more problems. But they sort of established the public mood, and now they risk sort of falling victim to it."

For the industry, however, the guidelines came as something of a relief. Some industry representatives had worried that restrictions would be applied retroactively.

Diane Casey-Landry, the chief operating officer and senior executive vice president of the American Bankers Association, said harsh restrictions could have scared away top talent.

"Obviously there has been a lot of concern, but one of the things, in order to get in the path to recovery, you need to have the right people and right compensation," she said. "There's a balancing act here. When you start talking with compensation of a star performer, a goal of management is always to retain your top employees."

Gil Schwartz, a partner in Schwartz & Ballen LLP, agreed.

"Anything that puts artificial constraints on the ability of institutions to get the right people into the right jobs is going to be problematic," he said. "It always has some type of unintended consequences on the long-term performance of the institutions."

Keefe Bruyette's Mr. Gardner said the guidelines are a victory for bankers.

"A lot of people were fearful that it was going to really drive a lot of talent away from the management ranks and that it was going to be overly burdensome and that it was going to be retroactively imposed," he said. "Well it's not retroactive, it doesn't impose burdensome restrictions on management, and it won't prevent banks from attracting talent."

Tough restrictions could have discouraged bankers from participating in Tarp at all — or encouraged them to pay back their existing Tarp money.

"When you step back from all of it, what it suggests is that the banks will have an incentive to pay the money back as soon as possible once they take it and become subject to it," said Tim McTaggart, a partner in Pepper Hamilton LLP.

Some companies are already rushing to pay money back. David Viniar, the chief financial officer at Goldman Sachs Group Inc., said Wednesday at an investor conference that the company wants to repay the $10 billion it received from the Treasury to escape any limitations that might be imposed.

It also remains possible that lawmakers could push for tougher restrictions.

House Financial Services Committee Chairman Barney Frank included a provision in a bill that passed the House last month imposing tough executive compensation rules that apply retroactively to Tarp recipients.

Sen. Claire McCaskill, D-Mo., and other lawmakers are pushing an amendment to the stimulus bill that would limit executive pay to $400,000 a year.

"I'm not sure Barney Frank and Claire McCaskill are going to be happy with the [Obama] proposal," Mr. Low said. "I don't know that it goes far enough to satisfy what they want. It certainly doesn't come close to what they asked for. I don't think this conversation is over."

Senate Banking Committee Chairman Chris Dodd said Wednesday he would also introduce an amendment to the economic stimulus package that would require the Treasury secretary to review any bonus paid to executives of Tarp recipients to determine if the payments were appropriate.

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