Obama's Pay Czar to Release New Rulings on Executive Pay

The Obama administration's pay czar, Ken Feinberg, will release new rulings Friday morning on the pay packages for some of the highest-paid employees at six companies receiving what the administration deems "exceptional assistance" from the government.

The rulings will cover 2009 compensation for the 26th to 100th highest-paid employees at six companies: AIG, Citigroup, GM, Chrysler, and the automakers' respective financing arms -- GMAC and Chrysler Financial.

VIDEO: Bankers still paid large salaries
null

Feinberg will impose a $500,000 salary cap on these employees unless "good cause" can be proven, a source familiar with the situation told ABC News Thursday.

In late October, Feinberg issued his rulings for 2009 compensation for the 25 highest paid employees at the same six companies as well as Bank of America, which just this week repaid $45 billion in taxpayer money and is now exempt from Feinberg's supervision.

VIDEO: Kenneth Feinberg Speaks With ABCs Betsy Stark
null

Feinberg's controversial rulings in October cut the annual salaries for the top 25 executives at the seven companies by an average of 90 percent from 2008's levels. Overall, the total compensation for the executives, including yearly bonuses and retirement pay, was cut by an average of around 50 percent.

Any executive who wants more than $25,000 in special perks like private planes, limos, company cars or country club memberships was mandated to receive government permission first.

Some companies were hit harder than others. Total direct compensation at GMAC declined by $413 million. Citigroup saw its total direct compensation fall $272 million and its cash compensation drop $244 million, a decrease of 96 percent.

In recent weeks, AIG has appeared especially frustrated with Feinberg's supervision.

Earlier this week, five AIG employees threatened to quit if the upcoming rulings from Feinberg resulted in a steep reduction of their pay. Since then, two of the employees have withdrawn their notice and none have stepped down, a source familiar with the matter told ABC News.

Capping Executive Pay

Just last month, AIG's new chief executive, Robert Benmosche, came close to leaving the company, frustrated with Feinberg's supervision. Benmosche ultimately elected to stay on at the insurance giant, but the CEO's dissatisfaction was evident in a letter he sent to employees.

"I and the Board are indeed frustrated and we are in ongoing discussions with Treasury and the Special Master to resolve the uncertainty surrounding this issue," Benmosche said. "We are all working aggressively to overcome this compensation barrier that stands in the way of restoring AIG's value and allowing us to live up to our obligations to all stakeholders."

A source familiar with AIG's situation acknowledged that Benmosche and Feinberg had "a real difference in opinion" in discussions about what constitutes acceptable pay packages at the company. However, the source stated, the two men now have "a good constructive relationship."

Benmosche's concerns stem from a fear that his company will be unable to attract and retain top talent in a competitive industry. When Feinberg issued his initial rulings in October on compensation for the 25 highest-paid employees at the seven institutions, only 13 AIG employees were affected because the other 12 had left the company.

Feinberg in October cut AIG's cash payments by $34 million, a 90 percent drop-off from 2008 levels. The company's total direct compensation to the 25 executives was slashed by $28 million, a drop of 57 percent.

Feinberg also is working to reduce $198 million in retention payments that the company is set to hand out this March, after the insurance giant came under fire for dishing out $165 million in retention payments last March.

-- This embed didnt make it to copy for story id = 9306129. -- This embed didnt make it to copy for story id = 9306129. -- This embed didnt make it to copy for story id = 9306129. -- This embed didnt make it to copy for story id = 9306129.
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...