Regulating banker pay. Robert Miller, professor of the Tepper School of Businesss at Carnegie Mellon, and James Batson, an attorney at Liddle & Robinson, argue against the Pay Czar's new compensation regulations.
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"Pay Czar" Kenneth Feinberg caps pay of mid level executives
The nation’s “pay czar” is at it again Friday, and this time, midlevel executives at bailed-out firms are getting a pay cut.
Fewer than 10 of 450 employees will be allowed to earn more than $500,000 per year, according to a source familiar with the plan, which covers six firms that received federal bailout funds.
Kenneth Feinberg, the special master for TARP executive compensation, will release the next phase of his determinations about pay for those executives Friday, and he’s expected to take a tough stance.
In October, Feinberg slashed pay for the first 25 most highly compensated employees at the TARP firms, prompting complaints from critics that the companies were being put at a competitive disadvantage for attracting and keeping top talent. Now Feinberg will issue pay rulings on employees 26 through 100 at the six companies
The source said executives who wanted to earn more than a half-million dollars had to demonstrate to the special master that there was an exceptional reason for the pay. But it’s likely that employees in the 26-100 group at Chrysler and Chrysler Financial will be exempt from the latest round of salary cuts because none of them earned more than $500,000.
Negotiations over the stringent pay measures may be one reason why several banks have been eager in recent days to pay back the government and free themselves from Feinberg’s authority. Bank of America sent the federal government a check for $45 billion this week, completing its withdrawal from the TARP program. And Citigroup is in negotiations with government officials over how it will be allowed to exit as well.
Feinberg, a Washington attorney best known for his work deciding compensation for victims of the Sept. 11 attacks, was appointed earlier this year by the Obama administration.
The new rules apply to six companies: Citigroup, American International Group, General Motors, Chrysler, Chrysler Financial and GMAC. Under the Emergency Economic and Stabilization Act, the special master has a mandate to review all forms of compensation for the top 100 highly compensated employees at the firms that received “exceptional” TARP assistance.
Sources: Politico, CNBC
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