Stimulus Act Expands Executive Compensation Restrictions For TARP Recipients

The American Recovery and Reinvestment Act of 2009 ("ARRA") that was signed into law on February 17, 2009, amended the Emergency Economic Stabilization Act of 2008 ("EESA"), which imposed certain executive compensation limits on companies receiving assistance under the U.S. Treasury Department's Troubled Asset Relief Program ("TARP"). This advisory highlights the enhanced executive compensation restrictions which the ARRA imposes on recipients of TARP funding ("TARP Recipients"). The restrictions discussed below apply to all TARP Recipients, regardless of whether the TARP funds were received prior to or after the enactment of the ARRA. Such restrictions generally apply for the period during which any obligation arising from the receipt of TARP funds remains outstanding, but do not apply to any period during which the federal government only holds warrants to purchase the TARP Recipient's common stock (the "TARP Period").