Feinberg cuts bosses' pay 15% at AIG, bailed-out automakers

March 24, 2010|By Jim Puzzanghera | Tribune Newspapers

WASHINGTON — — The Obama administration's pay czar said Tuesday that he was cutting compensation an average of 15 percent for the top executives at American International Group Inc., General Motors Co., Chrysler and two other companies that received exceptional federal bailouts and have yet to repay the money.

Guaranteed cash salaries or bonuses for the 25 top executives at the companies, which also include financing arms GMAC and Chrysler Financial, were cut an average of 33 percent from last year's levels, said Kenneth R. Feinberg, special master for executive compensation under the $700 billion Troubled Asset Relief Program.

Cash salaries at the five companies are $500,000 or less for 82 percent of the executives over which he has authority.

Feinberg has the power to set salaries for the five senior executives and the next 20 highest-paid employees at companies that received major taxpayer assistance.

Citigroup Inc. and Bank of America Corp. had been among those firms, and Feinberg set limits on their executive salaries last fall. But the banks have repaid their TARP money and no longer are subject to government review.

Feinberg still has some authority over all TARP recipients. He said he sent letters to all 419 recipients, including those that have repaid their bailout funds, asking for details about salaries and bonuses paid to employees earning more than $500,000 during the height of the financial crisis.

Under law, he must review those payments - from the date companies received TARP money in the fall of 2008 until Feb. 17, 2009 - to determine if the compensation was "inconsistent with the public interest."

Feinberg can seek repayment of any compensation he determines was inappropriate but cannot force it. Still, he said he could shame the company and probably would identify those who received the money.

"If we find there is a compensation decision inconsistent with the public interest, I cannot then file a lawsuit, can't subpoena records, can't demand an investigation," Feinberg told reporters. "All I have at my disposal under the law is the bully pulpit."

Asked if a multimillion-dollar bonus to an executive by a TARP recipient that lost money in 2008 would constitute a violation, Feinberg said it "certainly would raise some issues."

AIG has come under sharp criticism for large bonuses paid to employees at its Financial Products division, which engaged in the risky activities that drove the company to the brink of bankruptcy. Feinberg said he had succeeded in getting back the entire $45 million in retention bonuses given those employees.

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