Pay Czar Announces Pay Cuts to Top 100 Execs of Bailout Companies
Obama's pay czar Ken Feinberg may cut pay of top 100 executives at bailed out companies: Serrano
BY Michael Mcauliff
DAILY NEWS STAFF WRITER
Thursday, October 22nd 2009, 4:45 PM
APThe Obama administration may extend its order to bailed out companies to cut executive compensation.
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WASHINGTON -- Pay czar Ken Feinberg may expand his pay punishment to the top 100 earners at America's bailed-out financial firms.
Rep. Jose Serrano (D-Bronx), chairman of the House Financial Services subcommittee, met with Feinberg Thursday in his role as a Treasury Department overseer for a briefing on the executive compensation cuts Feinberg is demanding.
He learned Feinberg is not done.
"They are now beginning to look at 26 to 100," Serrano said. So far, the salary cuts up to 90% apply to the top 25 execs only.
"The argument here is a simple one. They're taking public funds. Congress is in charge of those public funds. It's totally inappropriate to go around paying themselves the kind of bonuses and salaries that they did," Serrano said.
"Any kind of government help you get, there are very strict rules, and we put you through a lot to get those dollars," he added. "Well, we're starting to tell these folks that they have to change their way of living.
"I just wish there were more corporations involved. These guys were being compensated for driving the whole economy into the ground."
Serrano noted that many of the worst offenders in creating the financial meltdown have been fired or departed their companies, taking with them huge payouts on the way out the door.
Figuring out how to get something back from them could be the next issue, he said.
"Everything is on the table," Serrano said. "I wouldn't be surprised if there are actions taken later as to people who did participate in the downfall and took off with a bonus parachute.... Once you open this door, you're starting to look at a lot of things."
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Wow. In my opinion, there is no perfect answer. I do know that once you get beyond the 25 the person at most companies the drop off in may is fairly extreme (with obvious rare exceptions). If care is not taken we could end up with #100 making less than the person who was #300 before the changes. What then? Do we keep climbing down until we are all paidly equally?
Sadly, I, and others, have been saying for many years that f we didn't fix the aspects of executive pay that were broken, someone would come in and "fix" them for us. It looks like we might be there.
Since the government hasn't yet spent anywhere near all of the bailout funds, it will be interesting to see which companies going forward will accept the funds knowing the top executive could have his/her pay cut.
It looks like were going to see some scorched earth here in how executive salaries are being handled and, to your point Dan, will create inequity in how executive pay, in general, will be affected.