Ken Feinberg to ride herd on exec pay
Speaking to a packed house in West Tisbury Sunday night, Kenneth Feinberg said he didn't like the "compensation czar" tag the media has pinned on him, since he was named special master to decide the pay some top executives will receive.
Mr. Feinberg described the law that gives him broad and "binding" authority over executive compensation in seven companies that received federal bailout funds. And, he said the authority includes not only the ability to trim 2009 compensation for some top executives but to change pay plans for second tier executives as well.
And, czar or no czar, Mr. Feinberg said he has the authority to "claw back" money already paid to executives in the seven companies whose pay plans he has begun to review.
And, explaining the further reach of his portfolio, he said that in cases where these companies signed valid contractual pay agreements before February 11 this year, the legislation creating his "special master" office permits him to ask that those contracts be renegotiated. If such a request is not honored, Mr. Feinberg told the Grange Hall audience that he could adjust pay in subsequent years to recapture overpayments that were legally beyond his reach in 2009.
Mr. Feinberg, the Washington lawyer appointed by Treasury Secretary Timothy Geithner to determine the compensation packages of top executives at seven companies - including AIG, Citigroup and Bank of America, GM, GMAC, Chrysler, and Chrysler Financial -that have been beneficiaries of federal bailout dollars from the Bush and Obama administrations and from the Congress, spoke for the first time publicly about his complex responsibilities as part of the Martha's Vineyard Times Newsmakers Series.
Asked by moderator Douglas Cabral, Times editor, if he thought the press had done a good job, Mr. Feinberg said,
"I am not a czar. A czar implies some sort of imperial edict." He then described the statutory limits of his authority and the complexities involved.
Throughout the evening program Mr. Feinberg provided good-natured and extensive responses to questions from some of the more than 150 people gathered in the Grange Hall in West Tisbury.
Mr. Feinberg said he has received the seven compensation proposals for each company's top 25 earners. He began to review the packages Monday. He has 60 days to rule on them. He is empowered to single out any of these employees and adjust their pay packages. Then, he will review the packages of the next 75 highest earners in each company. He can set pay formulas for them to be applied broadly and perhaps to serve as models for other businesses.
"My decision is final on these officials," Mr. Feinberg said, adding that there is no appeal to court or government officials.
A buoyant, energetic, 63-year-old Washington lawyer, Mr. Feinberg is a Brockton native and a frequent Vineyard visitor. He founded his own law firm, The Feinberg Group, in 1992.
Mr. Feinberg has presided over several difficult and draining assignments, including serving pro bono as special master of the federal government's September 11th Victim Compensation Fund, which distributed nearly $7 billion to more than 5,000 families and victims of 9/11. Like his current assignment, that was an unusual job, with few guideposts for the decision maker.
"It's a brutal, sort of cold thing to do," Mr. Feinberg said of his Victim Compensation Fund work, in a report by ABC news, on December 19, 2003. "Anybody who looks at this program and expects that by cutting a U.S. Treasury check, you are going to make 9/11 families happy, is vastly misunderstanding what's going on with this program."
In 2005, Mr. Feinberg published a book that described his experiences called "What Is Life Worth?"
Mr. Feinberg also administered the Hokie Spirit Memorial Fund, set up for the benefit of victims' families, following the mass shooting at Virginia Tech in 2007.
The next program in The Times' "Newsmaker" series will describe the new relationship between Martha's Vineyard Hospital and Massachusetts General Hospital and focus on health care issues, both on the Vineyard and nationally.
The panel of health care leaders will consist of Dr. Pieter Pil, chief of the Martha's Vineyard Hospital medical staff and a member of the hospital board of trustees; Dr. Peter Slavin, president of Massachusetts General Hospital and Harvard Medical School professor of health care policy; and Lynn Nicholas, president and CEO of the Massachusetts Hospital Association and a member of the Governor's Special Commission on Health Care Payment Reform.
The program is Tuesday, August 25, at 6:30 pm, at the Old Whaling Church on Main Street in Edgartown.