Compensation for senior executives should be deferred over a period of time but the rules should be flexible enough to avoid unintended consequences, a senior Treasury official has said. Speaking at an event at Columbia University in New York, David Miller, the chief investment officer of the government's Troubled Asset Relief Program, said that the best way to regulate compensation was to focus on the incentives in compensation and not the size of the pay. Institutions should be required to use clawbacks in the pay of senior executives to rein in inappropriate risk taking, he said.
"Looking at it over a longer time horizon and having the ability to claw back. These are areas we are trying to solve, [but] we need to be careful not to create another set of distortions," Miller said. The speech has come as regulators have proposed rules on executive compensation as part of the Dodd-Frank legislation. The Securities and Exchange Commission has approved a rule that would allow shareholders
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