Corporate America is shocked at pay czar Kenneth Feinberg.
That Washington appointed him to oversee compensation at companies getting bailouts? Nah. That he thinks people who abused shareholders and crippled the economy don't deserve pay of tens of millions in some cases? Not really.
People are flabbergasted he has the stomach to do anything about it.
CEOs figured that Feinberg would be like every other paymaster they ever had. That he would rub his chin, act concerned about doing the right thing and then wire the gross domestic product of Nicaragua into their bank accounts.
Strange to say, however, he seems to be cracking down.
On Thursday, the Treasury Department announced that he'll chop cash salaries by 90 percent, partly substituting long-term stock grants in many cases.
Overall, it looks as if he'll cut pay in half for 175 top employees at Bank of America, Citigroup, General Motors and other firms that got taxpayer bailouts. At American International Group's financial-products unit, he'll cap pay at $200,000, the Wall Street Journal reported. That's below Wall Street's poverty level.
The whacks "were clearly much worse than what had been anticipated," an anonymous exec at one of the companies told the Journal.
OK, bigwigs at these companies will still get big packages. Pay is descending from stratospheric levels to K2 or Denali. The $5 million Feinberg is likely to award Citigroup boss Vikram Pandit is still a lot more than the $0.00 million Pandit would have gotten if the American people hadn't rescued his stupid company.
Give a casting call to the guy who talked to the Journal. To counteract complaints that Feinberg is going too easy, these folks will act aggrieved even if he just cancels a couple golf-club memberships.
Even so, he's slicing pay by more than analysts expected. And that brings shame to boardrooms not just in New York but in Baltimore, Boston, Chicago and every town where flunky directors won't stand up to the CEO and his agent.
Folks, Feinberg just showed you how to do your job.
He's working for the interests of the shareholders he represents - in this case, U.S. taxpayers. His first concern isn't maintaining a lucrative board seat by avoiding controversy. He's focused on making sure shareholders don't get looted, not on the CEO's donation to his pet charity.
He grasps a simple concept understood by every employee up to the level of senior vice presidents and their bosses, among whom it's as incomprehensible as particle physics: When you mess up, you don't get rewarded.
Feinberg rejects arguments that the job market demands obscene pay for Wall Street hotshots and that eight-figure packages are crucial to retain talent. To stars who threaten to walk, he says: The elevator's down the hall, just past the cigar humidor.
No doubt some will leave. But as a good shareholder proxy, Feinberg probably knows that such folks may represent more of a liability than an asset. Many of these people make money on financial-market whiplash, not on the long-term health of their companies.
Heck, they cause the whiplash. If they want to leave AIG and go wreck some hedge fund, Feinberg ought to personally clean out their desks and carry their boxes down to the limo.
By slashing cash payments and giving people stock they must keep for years, he puts executives in the same harness with shareholders. This is what corporate boards claim to do but don't. Instead, they pay millions to consultants who come up with specious arguments to give CEOs what they want.
Watch and learn, corporate directors. Feinberg shows what independence looks like. He says "no." He causes friction. He hacks off the people whose pay he sets. Spend more time doing that and less time partying with the CEO.
By doing the right thing, by showing some guts, by putting up with what must be ridiculous lobbying and pressure, Feinberg is the guy who deserves the big payday.