President Barack Obama's pay czar said on Friday he will not cap compensation for the top employees at bailed-out companies, and will not reveal names, when he releases the first wave of decisions within a few weeks.
We don't want specific names next to dollars, said Kenneth Feinberg, who was appointed in June to decide compensation packages for the highest-paid personnel at companies that received U.S. government bailouts.
The rules do not call for capping pay, Feinberg told a conference here, adding he is faced with setting compensation that discourages excessive risk-taking and that relates pay to performance.
Feinberg said he has the daunting task of actually determining the compensation, adding, avoiding excessive risk means different things to different people in different situations.
Feinberg, a Washington lawyer, is reviewing companies bailed out in the U.S. Treasury's Troubled Asset Relief Program (TARP) -- a job he has acknowledged comes with enormous political pressures on the heels of the crippling financial and economic crisis that spread around the world.
For the past month, Feinberg and his team have been reviewing the appropriateness of pay packages proposed by seven companies that received extraordinary assistance from the U.S. Treasury: Citigroup Inc, Bank of America Corp, American International Group Inc, Chrysler Financial, Chrysler Group LLC, General Motors Co and GMAC Inc.
Feinberg said there are 15 people on his team, and that he has hired outside consultants. The team is preparing to issue initial determinations, he said at the New York conference hosted by Labaton Sucharow LLP.
The government has laid out general principles that will guide Feinberg's decisions, such as ensuring the contracts do not encourage excessive risk-taking, that they have an appropriate balance of short-term and long-term pay, and that pay is tied to performance.
The pay plans should also be generous enough that the companies can retain top people and become profitable enough to repay taxpayer investments, Treasury has said.
The model, report, and formulas Feinberg is using will be made public, he said on Friday, adding the rules could be a model for other regulators or institutions.
Feinberg, who previously oversaw payouts to families of victims of the September 11 attacks, has a great deal of latitude in making his determinations and can even claw back pay that employees have received if he finds that it was paid out unfairly.
After Feinberg makes his initial determination about whether to approve or disapprove pay contracts, the companies have 30 days to ask him to reconsider, after which Feinberg has 30 days to make a final determination.
The final determinations are binding, Treasury has said. Feinberg has been verifying the submissions since they were due in to Treasury on August 14.
Andrew Hall, a Citigroup energy trader on track to make about $100 million this year, has recently become a target for accusations of excessive pay at bailed-out companies.
After Feinberg finishes his review of pay packages for the companies' top 25 employees, he will have to approve broader compensation structures for the 75 next-highest-paid employees.
(Additional writing by Jonathan Spicer; Editing by Steve Orlofsky, Dave Zimmerman)