From Jake Tapper and Matthew Jaffe:
The White House will leave decisions about a Citigroup trader’s potentially $100 million bonus in the hands of Special Master Kenneth Feinberg, the Treasury Department official in charge of compensation for executives who work for companies that received tens of billions in government aid.
Andrew Hall, the director of Citigroup’s energy-trading division Phibro LLC, has a pay package that could be worth more than $100 million with Citigroup, which has received more than $45 billion in taxpayer bailout funds.
A Treasury official says that “Mr. Feinberg was appointed to review and approve executive compensation for top executives at the 7 firms receiving exceptional assistance to help ensure that companies strike the right balance around their need to retain talent, reward performance, and protect the taxpayers' investment. Obviously, we all have a shared interest in ensuring that those companies can return to profitability as soon as possible so that taxpayers can recoup their investment."
Asked about the pay package today, White House spokesman Robert Gibbs said that “the top 100 salaries of the seven firms that received extraordinary assistance under the TARP program fall, obviously, within the bailiwick of Mr. Feinberg's review. And I know there's an upcoming deadline on that, and I don't want to prejudge that deadline.”
AIG, Bank of America Corp., Chrysler Corp., Chrysler Financial, Citigroup Inc., General Motors Co., and GMAC Financial Services Inc. all have to submit their compensation packages for approval by Feinberg by Aug. 13
"Companies will need to convince Mr. Feinberg that they have struck the right balance to discourage excessive risk taking and reward performance for their top executives," said the Treasury Department official. "That process is just beginning now, and Mr. Feinberg has begun consulting with those firms about their compensation plans. We are not going to provide a running commentary on that process, but it's clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance.”
Gibbs did allow that “one could easily come to the conclusion that that's probably a bit out of whack on any pay scale.” Asked about Wall Street pushback that government limits might chase away those executives needed to strengthen Wall Street, Gibbs said, “the justification of setting outsized salaries is this notion of simply a series of unique skills or traits that can't be replicated by anybody on the planet, I don't know that the president would necessarily buy that notion.”
The Treasury Department spokesman noted that “Mr. Feinberg can't force companies to break a contractual obligation that is grandfathered in the statute. If the contract is not grandfathered by the statute (i.e. entered after the Feb 12 date), and is inconsistent with the limitations in the statute, then it is the statute that would require the contract not be followed, not Mr. Feinberg.”
-Jake Tapper and Matt Jaffe