According to recent reports, President Obama’s Pay Czar Kenneth Feinberg is expected to cut part of the cash many top Wall Street Executives receive as part of their annual salary. The move would only impact executives and top level employees at the seven firms he is reviewing, all of which have received aid from the government over the past year.
The Wall Street Journal broke the report, stating that by mid-October Feinberg is expected to release his determination on the annual pay packages of 175 top level employees at Bank of America (NYSE: BAC), American International Group (NYSE: AIG), Citigroup (NYSE: C), General Motors, GMAC Financial, Chrysler LLC and Chrysler Financial.
The upcoming decision could make things interesting for large banks, such as Bank of America, in the process of landing a new chief executive as a new pay precedent is likely to be set with the rulings.
Benmosche, who was named CEO of the insurer in August, will get a $7 million salary and as much as $3.5 million in long-term incentives.
In a letter released by the Treasury Department on October 2, Feinberg made the following statement of approval:
“I hereby detennine that the compensation structure set forth in the Letter Agreement, including the amounts payable or potentially payable under such compensation structure, will not result in payments that are inconsistent with the purposes of section I I I of EESA or TARP, or are otherwise contrary to the public interest.”
According to the letter, Feinberg believes the pay package is “appropriate when compared to the total compensation packages of other applicable Presidents and Chief Executive Officers of similarly situated companies.”
The letter also stated that any and all incentive compensation paid to Benmosche is subject to “clawback.” This means that if any of his payouts are based on false or inaccurate financial statements they would be eligible for recovery.
