Treasury Department “Pay Czar” Kenneth Feinberg says he is about to design compensation guidelines for second-tier executives at the seven biggest Troubled Asset Relief Program aid recipients.
Feinberg, the special master for TARP executive compensation, talked about the new executive compensation effort today at a House Oversight and Government Reform Committee hearing entitled “Executive Compensation: How Much is Too Much?”
Last week, Feinberg set strict limits on up-front, cash compensation for the top 25 executives at each of the seven biggest TARP participants. One of the companies affected is American International Group Inc., New York (NYSE:AIG).
Feinberg told lawmakers at the hearing that he is now implementing the section of the pay czar law that requires him to regulate the compensation of “executives 26 to 100″ at each of the seven big TARP participants.
“By the end of this year, we will have designed and implemented not individual pay packages for 26 to 100, but overall compensation structure for employees 26 to 100 in these seven companies,” Feinberg said.
The pay czar law also permits the Treasury secretary to ask Feinberg to set 2010 compensation levels for employees 1 to 25 at the seven big TARP participants.
Feinberg said he hopes his compensation decisions will set a good example for Wall Street, but he rejected the idea of having the pay czar regulate compensation at companies other than the seven big TARP participants.
“These seven companies are owned by the taxpayer,” Feinberg said.
Congress created the TARP pay czar position in the hope of helping the taxpayers get their money back, not because of a belief that the government should micro manage compensation at private companies, Feinberg said.
The hearing topic inspired other witnesses to give colorful, emotional testimony about what they believe to be flaws in the government’s approach to bailing out big companies and compensating those companies’ executives.
Russell Roberts, a professor of economics at George Mason University, said the government should have let more giant financial companies fail.