“Obviously, it is a concern”

That quote comes from Grant Yarber, CEO of Raleigh-based Capital Bank, on the prospect of retaining top executives in light of the federal government’s cap on incentive/bonus pay. From the Raleigh News & Observer:

Capital Bank CEO Grant Yarber said the ban on incentive and bonus pay was “irrelevant” to his bank this year because it decided in December to forgo such compensation in light of the recession.

Will that make it difficult for the bank to retain top executives?

“Obviously, it is a concern,” Yarber said. However, he added, “We feel very comfortable with the team at Capital Bank and [their] loyalty.”

Although Capital received its federal money in December, it wasn’t until February that Congress passed a law that retroactively limited total cash compensation to $500,000 and eliminated bonuses at banks that owe the federal government money.

I don’t really sympathize with bank execs facing this scenario. When you take federal money, you play by the government’s rules. And you should expect the government to change those rules in the middle of the game based on political considerations. That’s exactly what happened. Now the banks are stuck with it.