Obama Official: Executive Pay Must Be Controlled to Minimize Economic Risk

Executives looking for a pay raise are going to have to get Uncle Sam's signature of approval.

Gene Sperling, adviser to Treasury Secretary Timothy Geithner, said in testimony to the House Financial Services Committee Thursday that the administration does not want to impose caps on executive pay but compensation must be better managed to prevent the sort of risk-taking that jeopardizes the economy.

Sperling laid out a list of guidelines calling on publicly-held companies to link compensation to long-term performance, not short-term gains.

The administration believes compensation practices "must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," he said.

The companies subject to federal regulations for executive pay will be those "companies that received such exceptional taxpayer assistance" than their peers that it "brings on a higher fiduciary duty."

Such assistance by the federal government, according to Sperling, makes "an extra level of protection for the taxpayer, necessary and important."

The Associated Press contributed to this report.