A well-known Washington lawyer, Kenneth Feinberg will be overseeing the compensation of seven bailed out firms including AIG, Citi, BofA, and two automakers. While there will be no set cap on salaries and bonuses, the official will have his automatic approval for compensation not increading $500,000. This will cover the firms’ 5 most senior executives and the 20 highest paid employees. From among the many firms that have been bailed out, Citi and BofA are just two of the biggest who have not yet been approved to repay the TARP money. The Treasury has approved 10, including Morgan Stanley, even with a capital deficit.
From the NYT:
…the seven companies will have 60 days to submit the pay packages of the 25 top executives. Mr. Feinberg would then have 60 days to review those plans.
In weighing the appropriateness of the pay, Mr. Feinberg is to consider such criteria as the profitability of the company, the general marketplace for compensation, the ability of the company to repay their taxpayer loan and the extent to which the pay packages encourage excessive risk-taking.
This sounds a bit of a good news. Apart from some of the biggest firms already out of the restriction, this looks a little less stringent. Yes to regulation, no to cap on compensation.