casper
11-17-2009, 01:04 PM
Pay czar flexible if talent flight
By Karey Wutkowski and Steve Eder
NEW YORK - A "mass exodus" of talent from bailed out firms would prompt U.S. pay czar to revisit the formulas he has used in his rulings, Kenneth Feinberg said on Monday.
Feinberg, who last month slashed the pay of top earners at seven firms that needed extraordinary taxpayer bailouts, said he is not aware of any employee departures tied to his rulings.
"If I saw some mass exodus, which I do not anticipate, that would require me to rethink some of the basic assumptions that have entered into my determinations," Feinberg told Reuters Insider as part of the Reuters Global Finance Summit in New York.
He also said that if a company violates his rulings, which are binding, the government could sue that firm.
"If they're in violation of the law, they would confront a lawsuit, I think from the Department of Justice or somebody, that they're in violation of the law, but I don't anticipate that at all," he said.
Feinberg's recent rulings applied to the pay for the last two months of the year for the top 25 earners at firms that have received "exceptional" taxpayer assistance.
Those firms are: Bank of America, Citigroup, AIG,
General Motors GM.UL, Chrysler, Chrysler Financial and GMAC.
He cut overall compensation by 50 percent and cash pay by 90 percent at those firms. Feinberg said the rulings are designed to reward long-term performance and clamp down on guaranteed cash, while still being attractive enough so talent would stay at the companies as they aim to repay the government.
However, Bank of America immediately spoke out against the rulings last month, claiming that competitors were already poaching their workers. AIG Chief Executive Robert Benmosche also has complained about Feinberg's job, saying in a letter to employees that he is "frustrated" about restrictions on pay.
Feinberg said he has not received any formal appeals of his rulings, and the window to do so closes in a few days.
"The clock has just about run out," he said.
Feinberg's next challenge is determining compensation structures for the 26 to 100 top earners at the seven companies, which he hopes to have done by early December.
He said those structures will only apply for one month, but as that is when large bonuses are typically paid out, it could put a noticeable dent in those employees' overall pay for 2009.
"It can have some impact. We'll see," he said.
Feinberg also highlighted that while his jurisdiction is limited to top 100 earners, he could see the ramifications of those decisions bleeding further down into the ranks.
By Karey Wutkowski and Steve Eder
NEW YORK - A "mass exodus" of talent from bailed out firms would prompt U.S. pay czar to revisit the formulas he has used in his rulings, Kenneth Feinberg said on Monday.
Feinberg, who last month slashed the pay of top earners at seven firms that needed extraordinary taxpayer bailouts, said he is not aware of any employee departures tied to his rulings.
"If I saw some mass exodus, which I do not anticipate, that would require me to rethink some of the basic assumptions that have entered into my determinations," Feinberg told Reuters Insider as part of the Reuters Global Finance Summit in New York.
He also said that if a company violates his rulings, which are binding, the government could sue that firm.
"If they're in violation of the law, they would confront a lawsuit, I think from the Department of Justice or somebody, that they're in violation of the law, but I don't anticipate that at all," he said.
Feinberg's recent rulings applied to the pay for the last two months of the year for the top 25 earners at firms that have received "exceptional" taxpayer assistance.
Those firms are: Bank of America, Citigroup, AIG,
General Motors GM.UL, Chrysler, Chrysler Financial and GMAC.
He cut overall compensation by 50 percent and cash pay by 90 percent at those firms. Feinberg said the rulings are designed to reward long-term performance and clamp down on guaranteed cash, while still being attractive enough so talent would stay at the companies as they aim to repay the government.
However, Bank of America immediately spoke out against the rulings last month, claiming that competitors were already poaching their workers. AIG Chief Executive Robert Benmosche also has complained about Feinberg's job, saying in a letter to employees that he is "frustrated" about restrictions on pay.
Feinberg said he has not received any formal appeals of his rulings, and the window to do so closes in a few days.
"The clock has just about run out," he said.
Feinberg's next challenge is determining compensation structures for the 26 to 100 top earners at the seven companies, which he hopes to have done by early December.
He said those structures will only apply for one month, but as that is when large bonuses are typically paid out, it could put a noticeable dent in those employees' overall pay for 2009.
"It can have some impact. We'll see," he said.
Feinberg also highlighted that while his jurisdiction is limited to top 100 earners, he could see the ramifications of those decisions bleeding further down into the ranks.