Pay cut for 25 top earners at 5 bailed-out firms
WASHINGTON – The administration’s pay czar said Tuesday that the top 25 earners at five companies still receiving extraordinary aid from the government’s bailout fund will be paid an average 15 percent less in 2010 than in 2009 under his restrictions.
The companies include troubled automakers General Motors and Chrysler and insurance giant American International Group.
Pay czar Kenneth Feinberg also said he is asking 419 companies that received bailout money to provide details of compensation they received at the height of the financial crisis at the end of 2008 and early 2009.
Feinberg’s announcement was the administration’s latest effort to deal with public outrage over bonus payments provided to executives at companies receiving billions of dollars in taxpayer support.
Detailing the 2010 pay rules, Feinberg said cash salaries would be capped at $500,000 for 82 percent of the top 25 executives at the five firms. These executives would have to receive any further compensation in stock. Feinberg is seeking to link the executives’ decisions more closely to the success of their companies.
The decisions announced Tuesday followed a pattern of rulings Feinberg made in October. That is when he issued compensation rules for the seven companies receiving the most money from the government’s $700 billion bailout fund.
Since those decisions, two of the biggest companies, Citigroup and Bank of America, have paid back the government support and are no longer covered by Feinberg’s pay guidelines.
The five companies still covered are General Motors and its financing arm, GMAC, Chrysler and its financing arm, Chrysler Financial, and AIG.
The “look back” letters will be sent to 419 companies that received bailout money before Feb. 17, 2009. The companies include major firms such as Goldman Sachs and JPMorgan Chase. For executives who make more than $500,000, their firms are asked to detail what forms of compensation they received from the time they got their bailout money until Feb. 17.
Those companies will have 30 days to provide Feinberg with that information. He said he planned to report on his findings within two months after receiving the data.
Under the law, Feinberg cannot require executives to return any compensation such as 2008 bonuses that he deems excessive. But Feinberg said he would review the compensation paid during that period to see if any of it could be deemed “inconsistent with the public interest.”