August 10, 2009

Pay Czar Meets With Executives As Compensation Deadline Looms

Pay Czar Meets With Executives As Compensation Deadline Looms.

The Washington Post (8/9, A1, Dennis, Tse) reported on its front page, "President Obama's compensation czar has been meeting for weeks with executives at some of the country's largest and most troubled companies as they face a Thursday deadline to propose how much they will pay their top employees." Kenneth R. Feinberg has the "unprecedented task of deciding executive compensation at seven companies that received large government bailouts." With Congress and the public "already exasperated by the hefty pay awarded to Wall Street bankers, Feinberg is under intense pressure to put checks on excessive pay." But if he "goes too far, the companies he oversees could lose their rainmakers and other key executives to rival firms that are not subject to similar pay restrictions." The seven companies are "still finalizing the pay plans due Thursday" and "all seek to give employees an incentive to care about the long-term health of their company instead of short-term gain."

        The New York Times (8/10, A1, Dash) reports on its front page, "The companies must each submit 2009 compensation plans for their top 25 earners by Thursday, and Mr. Feinberg has 60 days to rule on them. He has the authority to single out any of those employees and adjust their pay packages." In the next phase, he is "to review the packages of the next 75 highest earners in each company. For them, he can set pay formulas to be applied broadly." Feinberg has "met privately with executives at the companies and urged them to voluntarily rework any guarantees for big earners in advance of the submission deadline...with the goal of holding out these pay packages as examples for the industry." The resurgence of bonus guarantees "underscores just how difficult it is to control Wall Street pay, despite the public outcry over how taxpayer money is being spent."

        USA Today (8/10, Gogoi) reports, "Public outrage has boiled over as billions of dollars in bonuses have been handed out on Wall Street, the center of the 2008 financial storm that contributed to the worst recession in generations and left millions of people jobless." Still, despite "all the apparent momentum building to rein in runaway pay, it looks as if Wall Street's compensation practices will largely emerge unscathed." Officials have blamed Wall Street's pay structure "for making the financial crisis worse." However, studies have found "that there is little correlation between pay and performance on Wall Street, and bankers win no matter which way the market goes."