Pay czar: Next ruling may carry more clout

Executive compensation guru for TARP says decisions on middle managers, due in December, could resonate nationwide.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Jennifer Liberto, senior writer

Pay czar Ken Feinberg says watch for the next round of pay caps.

WASHINGTON ( -- The next round of executive pay decisions for companies that have received substantial government bailout funds could have a more lasting impact on pay practices nationwide, the special master on pay for the bailout said Tuesday.

Kenneth Feinberg, the so-called pay czar of the Troubled Asset Relief Program (TARP), last week imposed caps on those who hold the top 25 positions at seven companies in which the government has a substantial stake, including AIG (AIG, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500). He also demanded that each of the bailed-out companies reduce compensation for the 25 highest-paid employees by an average 50%.

His next round of edicts, due in December, will set guidelines, as opposed to dollar amounts, for those who occupy the next tier of jobs, or the top 26 through 100 employees.

Feinberg, speaking at a Georgetown University symposium in Washington, said the guidelines will reflect already established principles, with reduced cash salaries and more emphasis on tying pay to long-term company performance.

"I think that the most likely area where I'll have long-term impact is, frankly 26-100," he said. "The compensation structures that I have to come up with will be sort of a blueprint that these companies have to follow in setting their own compensation for their other employees."

"Maybe, there, other companies and regulators will pick up on what I'm doing, " Feinberg added.

He said a wider impact could follow if the Securities and Exchange Commission, (SEC) the Federal Reserve, Treasury and his office, all work together to create a broader effort to regulate executive compensation.

While the agencies are talking about their efforts on executive pay right now, they haven't started coordinating in such a way yet. However, last week, on the same day that Feinberg's announcement came out, the Fed released its plans. It will review pay practices at 28 of the nation's largest banks to make sure employees are not tempted to make the kinds of risky bets that helped sink firms such as Lehman Brothers.

Feinberg noted that critics have predicted that his recent decision capping executive pay will have little to no impact on pay practices in the private world. But he said that's he's hopeful.

"Maybe there will be some private voluntary effort to restructure and better regulate, privately, corporate pay," he said.

The pay caps announced last week take effect in November and serve as a base for executive pay in 2010.

President Obama appointed Feinberg in June to review compensation practices at the seven companies, which the government has the greatest stake in.

Feinberg stressed that the law limited his job in scope and he said that his orders were in no way "vindictive."

"I'm not riding into this on a white charger," he said. "My goal is implement the law. . .I'm acting pursuant to Congress." To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
RadioShack: 94 years of hits and misses The electronic giant's road to ruin is littered with 8-tracks, CD payers, pagers and many, many calculators. More
The best TV deals for the Super Bowl Want a new TV for the Super Bowl? Some great deals make now the time to buy. More
Top-paying jobs Orthopedic surgeons take home a median $410,000 in salary and bonus annually. What other great careers from CNNMoney and's list of Best Jobs in America offer hefty paychecks? More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.