U.S. "pay czar" Feinberg using formulas, not caps
NEW YORK (Reuters) - President Barack Obama's "pay czar" said on Friday he was using formulas and data analysis to determine executive compensation rather than relying on pay caps.
Kenneth Feinberg, appointed in June to decide compensation packages for the highest-paid personnel at companies that received U.S. government bailouts, said his team of 15 people is reviewing pay data submitted by seven firms that needed extraordinary assistance, a group that includes Citigroup Inc, Bank of America Corp, and American International Group Inc .
"We are now immersed in looking at all this data that has been submitted to us," Feinberg said while speaking at a New York conference hosted by Labaton Sucharow LLP, a law firm.
Feinberg called his task "daunting," but said he expected to release the first wave of pay decisions within a few weeks. He did not plan to reveal the names of employees under his jurisdiction.
"We don't want specific names next to dollars," Feinberg said.
Citigroup energy trader Andrew Hall, whose pay package could exceed $100 million this year, is the target of the public's ire.
Last week, Citigroup CEO Vikram Pandit said that $100 million is too much for an employee to earn, considering the bank's circumstances.
But Feinberg ruled out capping pay, saying he is building "models" which he believes will set a precedent for government agencies and companies tackling the controversial issue of executive compensation.
SETTING A PRECEDENT
Feinberg said his work could set a precedent for forthcoming pay rules from the U.S. Federal Reserve, which would impact pay at all Fed-regulated banks. Both Feinberg and the Fed are looking to set rules that discourage excessive risk-taking and that relates pay to performance.
The model he is building, Feinberg said, is complicated by the fact that "avoiding excessive risk means different things to different people in different situations."
The pay plans should also be generous enough that the companies can retain top people and become profitable enough to repay taxpayer investments, the Treasury has said.
Feinberg has a great deal of latitude in making his determinations and can even claw back pay that employees have received if he finds that it was paid out unfairly.
After Feinberg makes his initial determination about whether to approve or disapprove pay contracts, the companies have 30 days to ask him to reconsider, after which Feinberg has 30 days to make a final determination.
The final determinations are binding, Treasury has said.
After Feinberg finishes his review of pay packages for the companies' top 25 employees, he will have to approve broader compensation structures for the 75 next-highest-paid employees.
Feinberg previously oversaw funds for families of victims of the September 11 attacks. In those cases, he worked with teams to develop formulas to determine payouts.
(Additional writing by Jonathan Spicer; Reporting by Steve Eder. Editing by Steve Orlofsky, Dave Zimmerman, Leslie Gevirtz)
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