Feinberg to Assess Executive Compensation Plans at Companies Receiving Bailout Funds

Aug. 12, 2009— -- Perhaps no issue has incited more public outrage than companies paying out big bonuses to top executives after receiving billions in taxpayer bailout money. Now the Obama administration's pay czar is preparing to take action.

In recent weeks, Kenneth Feinberg has been meeting with seven companies receiving what the Obama administration calls "exceptional assistance": AIG, Citigroup, Bank of America, GM, GMAC, Chrysler and Chrysler Financial.

By Thursday, these companies must submit to Feinberg this year's pay plans for their top 25 executives. Feinberg will then have 60 days to assess the plans and work with the companies on their compensation structures.

Pay plans for the other top 75 executives at these companies are due at a later date.

The process is sure to be contentious. Critics abound on both sides of the issue. Some people are outraged about companies collecting taxpayer money only to then dish out big bonuses in the midst of a massive recession. Others are fearful of the government delving too far into the affairs of private businesses.

The conflicts inherent in his job are not lost on Feinberg himself.

"Historically, the American people frown on the notion of government insinuating itself into the private marketplace," he told ABC News on June 11, a day after his appointment. "My answer to those critics is I understand that concern, I share that concern, and the question is how do you strike a balance between that legitimate concern and the populist outrage at prior industry compensation practices?"

Even in its first six months in office, the Obama administration has seen first-hand the type of populist outrage that Feinberg hopes to avoid.

In March, insurance company AIG, the recipient of more than $180 billion in taxpayer bailouts, caused an uproar by paying out $165 million in corporate bonuses.

The ensuing furor -- both inside and outside the Beltway -- was directed not just at the company, but at the government that had bailed it out.

Two Republican lawmakers even called for President Obama's Treasury Secretary Tim Geithner to resign.