Obama Pay Chief: Criticism Of Position Valid
Obama Pay Chief: Criticism Of Position Valid
Kenneth Feinberg is overseeing compensation packages for the top executives in companies that are receiving federal bailout money. He disdains the notion that he is a compensation czar who will order companies to conform. Instead, he says, he will work with companies to find pay structures in line with the public interest.
MICHELE NORRIS, host:
The Obama administration is making good on a promise. The era of big compensations and excess is coming to an end, at least for executives in firms receiving bailout money. Yesterday, the White House named Kenneth Feinberg special master for executive pay compensation. Feinberg oversaw payouts for the families of 9/11 victims. In his new role, he will oversee pay for executives at the seven firms that receive the most bailout money. He will not be compensated for his work. Mr. Feinberg joins us now from his office in Washington, D.C.
Mr. Feinberg, welcome to the program.
Mr. KENNETH FEINBERG (Special Master for Executive Pay Compensation): Thank you.
NORRIS: First, give us a thumbnail. Tell us exactly what your mandate is, the scope of your reach.
Mr. FEINBERG: The mandate I have, pursuant to statute and regulation, threefold: First I must help determine compensation for the 25 highest paid officials in the seven top assisted companies - AIG, Bank of America, etc. I then have an obligation for those seven companies to design a compensation structure for the companies. And finally, I have the authority, if I wish to exercise it in the public interest, to seek to recoup some monies that may have been paid in excessive compensation in the past to various top recipients.
NORRIS: And I'm just going to take the last thing, there. If you were tying to recoup funds, do you deal then with the shareholders, with the company? Is this - I guess you were representing the arm of the law of the arm of the government, where would that reach?
Mr. FEINBERG: I think it would reach to the extent that I wish to exercise it. It would reach back to the individual who received the compensation.
NORRIS: Now we heard the Treasury secretary, Timothy Geithner, yesterday talk about some of the things that he didn't think the government should be doing. The government shouldn't be setting specific caps on executive pay. It shouldn't be dictating executive pay - help us understand what role the government should have in this case.
Mr. FEINBERG: Well, historically, in our country's heritage, we do not look kindly on the federal government insinuating itself into the private marketplace and micromanaging these companies. On the other hand, there's this populist sentiment today that there was excessive compensation paid to high-level company officials. How I balance that tension is precisely what the secretary was discussing yesterday when he talked about the desire of the federal government not to get heavily involved in setting compensation rates or caps or income for private company officials.
NORRIS: You know, when some people listen to you speak, I imagine that there are folks that might be uncomfortable with this arrangement. They might think that you've been given what is essentially a blank check from the federal Treasury.
Mr. FEINBERG: That criticism is valid. I mean, one thing I recoil when I hear or read in the press, that I'm some type of compensation czar, like I'm going to issue imperial edicts against company officials. I think that's a very poor choice of a noun describing my role. I would rather like to think of myself as an individual who will work with these companies in a win-win situation, developing compensation structures and amounts consistent with the public interest. And that's going to be the challenge.
NORRIS: You know, one of the concerns about limits on executive pay, or compensation, is the concern about attracting the best talent. We've heard that limiting compensation might make it harder for some of these companies to attract the best people. What do you say to that?
Mr. FEINBERG: Oh, I think that's a valid concern. I mean, if, in fact, some of these companies are going to find that compensation levels will decrease or inhibit their ability to keep good people, I think that has to be a concern that has to be addressed. So that's one variable among many that I will have to weigh in consultation with these companies in coming up with a sound package.
NORRIS: You've worked in the private sector. You're an attorney, and a successful one. Would you chafe under this kind of system if someone else was making these kind of recommendations on your compensation package?
Mr. FEINBERG: I think I would. I think most people who - if they're in the shoes of these seven companies - would chafe. And I think that's a natural reaction.
NORRIS: So you're overseeing a club that you wouldn't want to be a member of.
Mr. FEINBERG: I'm overseeing, pursuant to law, a company where I'm hoping that the company officials and the special master will be able to work out a satisfactory resolution. I'm not looking to impose my will. I'm hoping that the companies will be able to work with me in satisfying the legal requirements established by Congress and the regulations.
NORRIS: Mr. Feinberg, it's been a pleasure to talk to you. Thank you very much.
Mr. FEINBERG: Thank you very much.
NORRIS: We were talking with Kenneth Feinberg, named this week by the White House as the special master for executive pay compensation.
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