Obama Overseer to Set Pay at Rescued Companies

The Obama administration on Wednesday appointed a compensation czar who will have broad discretion to set the pay for 175 top executives at seven of the nation’s largest companies, which received hundreds of billions of dollars in federal assistance to survive. The mandate given to the new compensation official, Kenneth R. Feinberg, a well-known Washington lawyer, reflects the federal government’s increasingly intrusive role in the corporate affairs of troubled companies. From his nondescript office in Room 1310 of the Treasury building, Mr. Feinberg will set the salaries and bonuses of some of the top executives in America, including Kenneth D. Lewis, the chief executive of Bank of America; Vikram S. Pandit, the head of Citigroup, and Fritz Henderson, the chief executive of General Motors. The compensation of executives at some companies receiving aid provoked a firestorm of political outrage earlier this year. In revising an earlier proposal to set pay limits, the Obama administration has decided to take an approach that will leave the success or failure of the effort to curtail high compensation at the assisted companies in the hands of Mr. Feinberg. (Mr. Feinberg himself will not receive any government compensation.)Instead of deciding compensation levels himself, the Treasury secretary, Timothy F. Geithner, decided to appoint Mr. Feinberg, a well-known mediator whose last high-profile assignment was putting a financial value on the lives of victims of the 9/11 attack, to decide the pay for the top 25 executives at the American International Group,Chrysler, Chry Citibank, sler Credit, General Motors, GMAC and Bank of America. For 80 other financial institutions that have received federal assistance, Mr. Feinberg will develop the overall compensation structure, but without setting the exact level of pay. For these 80 companies, the goal is to reduce excessive risk-taking by executives whose compensation is tied to company performance. Mr. Feinberg will also determine whether it would be in the public interest to force any executives at companies receiving assistance who might have been overpaid to return some pay.Mr. Feinberg became a nationally known figure after he was assigned by the Bush administration to help settle possible lawsuits by the families of victims of the terrorist attacks on Sept. 11, 2001. His job was to put a value on the lives of the victims and offer government settlements to avoid lawsuits. Mr. Feinberg met with many of the families and spoke around the country about how intellectually challenging and emotionally difficult the assignment became. He often sought refuge by cloistering himself in a room in his home to listen to his extensive opera collection.

Before that assignment, he was appointed by federal district judges to help resolve some of the most difficult product liability lawsuits. He played central roles in resolving prominent cases involving victims of asbestos, Agent Orange, and the Dalkon Shield, a birth control device that injured more than 200,000 women. He also was one of three arbitrators who determined the fair market value of the Zapruder film that captured the assassination of President John F. Kennedy, resolving a dispute between the heirs of Abraham Zapruder, who shot the footage, and the government, which acquired the 26-second film.

Obama 2008

The announcement is the third effort by Washington to respond to public outrage over high pay at companies receiving taxpayer assistance. On Feb. 4, the Obama administration announced a proposal to set a $500,000 cap on cash compensation for the most senior executives at troubled companies getting “exceptional assistance,” and restrictions on cashing in on stock incentives.

That plan did little to quell public outrage as details of bonuses were disclosed at a number of major companies receiving federal assistance. Two weeks after the Obama plan was announced, Congress approved a $787 billion economic stimulus bill that included more restrictions on the pay of executives at institutions receiving aid. The provision, inserted by Senator Christopher J. Dodd, the Connecticut Democrat, over the objections of the Obama administration, instructed Treasury to come up with new rules for the five most senior officers and the 20 highest-paid executives at the most troubled companies. That legislation was the basis for the appointment of Mr. Feinberg. Mr. Dodd recommended the appointment of Mr. Feinberg to Mr. Geithner last month, a person briefed on that conversation recalled.


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