Kenneth Feinberg, the U.S. pay czar that is considered by many as the personification of what Wall Street’s major players feared since the federal gov’t pumped billions of dollars into private co.’s on the brink of collapse, released new rulings today on the compensation structures from the 26th through 100th highest-paid midlevel executives at four firms: Citigroup Inc (C), American International Group (AIG), General Motors Co, and GMAC. According to Feinberg, bailout recipients salaries will be mostly limited to $500,000 per year. Total cash may not exceed 45% of total compensation. The rest must be in company stock.
Chrysler and Chrysler Financial will be exempt from the latest round of salary cuts because total pay for their second-tier execs already does not exceed $500K.
Negotiations over the strict pay structures has been one of the main reasons why several banks have been eager in recent days to pay back the government and free themselves from Feinberg’s thumb who was charged by the Obama administration with deciding the salaries of the top executives at many of the firms bailed out by the federal gov’t in the 2008-2009 recession. Bank of America (BAC) paid the federal government $45 billion this week, completing its withdrawal from the TARP program.
[ABC]”The negotiations with these companies have been very cordial, very constructive,” Feinberg said. “There’s been some disagreements but I think there’s general acceptance that the process has worked out very well.”
Feinberg called the new rules “mandatory prescriptions that these companies must follow.”