Pay Czar Expanding Compensation Review to 25 Top Execs at Bailed-Out Financial Companies
Kenneth Feinberg can seek to renegotiate any pay deemed not in the public's interest but can't forcibly recoup funds, government and banking industry officials told The Associated Press on Monday. Feinberg is to announce the review Tuesday, according to the officials, who requested anonymity because they weren't authorized to discuss the plan publicly.
The review is required under the federal law that created Feinberg's position. It will mainly focus on the 2008 pay awarded to five senior executives and the next 20 highest paid employees at 419 firms that benefited from the $700 billion Troubled Asset Relief Program. The companies will be asked to turn over compensation data paid to those employees through Feb. 17, 2009, according to the officials.
CEOs at many large banks gave up bonuses in 2008 amid sharp criticism of outsized Wall Street pay packages. Feinberg's review will seek to determine whether other employees received pay deemed excessive or contrary to the public's best interest.
But his authority will be far more limited than the power he had over seven companies deemed to have received what the government extraordinary taxpayer assistance. Since Citigroup Inc. and Bank of America Corp. repaid their bailouts, Feinberg now has direct oversight of GMAC, American International Group Inc., General Motors Co., Chrysler and Chrysler Financial.
Feinberg is also expected to announce 2010 pay packages for those companies on Tuesday.
Last month, Feinberg criticized as "outrageous" bonus payments totalling $100 million to AIG employees from the same unit that nearly toppled the firm. Feinberg was unable to stop the so-called retention bonuses, which were contractual obligations agreed upon before the insurer received a $180 billion federal rescue at the height of the financial crisis in late 2008.
In October, Feinberg ruled that the top 25 executives at companies receiving exceptional assistance from the bailout fund would have their pay capped in most cases at $500,000 for 2009. They were required to receive additional compensation in the form of company stock paid out over three years, to try to tie their performance to the fate of their companies.
Even before Feinberg's decision, banks that had received billions in government aid to cope with the worst financial crisis since the Great Depression had been scrambling to repay the government so they could escape the TARP restrictions.
Still, the banks have been responding to criticism of their pay practices, paying more in stock that cannot be immediately sold rather than in cash.
Wagner reported from Washington.