Obama's Pay Czar Concerned Firms Could Lose Talent
November 12, 2009 - 10:39 AMThe Obama administration's pay czar said Thursday that he is "very concerned" about scaring away top talent at seven firms that took the biggest bailouts.
"The determinations I render I design first and foremost to make sure those companies thrive and that the taxpayers get their money back," said Kenneth Feinberg, the Treasury Department's special master for executive compensation.
Feinberg spoke following reports that American International Group Inc. CEO Robert Benmosche was threatening to leave after chafing under Feinberg's oversight of pay at the firm. Benmosche said Wednesday he was frustrated but planned to stay on.
Feinberg didn't learn about Benmosche's purported threats to leave the company until reading those news reports, he told reporters after his speech.
But he said Benmosche had told him that Feinberg's pay rules for the 25 highest-earning employees would cause key personnel to leave, making it difficult for the company to return its taxpayer bailouts.
New York-based AIG received an aid package worth up to $180 billion from the government in exchange for a roughly 80 percent stake in the company. That bailout package also includes restrictions on compensation for the insurer's 100 highest-paid employees.
Most analysts are skeptical AIG will be able to pay back its billions, many of which went to banks including Goldman Sachs Group Inc. and Deutsche Bank to wind down complex financial deals.
AIG "may not be able to pay the whole thing back for a period of time," Feinberg said, "but if we see signs there is repayment of (the bailouts), installments or whatever, I think we're doing our job."
Feinberg's office is not directly responsible for deciding whether AIG is capable of repaying the money, or how much it can repay.
Besides AIG, Feinberg oversees pay at Bank of America Corp., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.
Speaking at the Bloomberg Washington Summit, Feinberg said no company had formally appealed his decisions about pay for their top 25 earners. He said only Bank of America and AIG had raised strong informal objections.
By contrast, the submissions from automakers showed that their pay packages are "much less than competitive pay at Citigroup or Bank of America," Feinberg said.
"The overall competitive pay we laid out will allow the auto industry to move forward," he said.
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