Obama Pay Czar Cuts Executive Pay

Pay czar Kenneth Feinberg has decided to bring the hammer of his authority crashing down on the executive pay packages of the seven firms receiving the most federal aid. According to media reports, Feinberg and the government will limit the pay of the twenty five highest-paid executives at these companies, with salaries taking the biggest cuts.

In all, salaries are expected to plummet 90 percent on average and total compensation will most likely fall by about 50 percent, marking a huge decrease in the amount that many executives will be receiving as compensation this year. The executives of AIG’s financial products unit, which has been identified in one of the main causes behind the insurer’s close brush with collapse, will receive no more than $200,000 in pay, and any perks packages larger than $25,000 in value at any of these firms will need approval.

Although the changes to pay levels have shocked the business community, Feinberg’s reported moves to demand changes in governance at these firms has also attracted much skepticism. Reports say that the positions of Chairman and CEO will have to be split, that boards will have to create risk assessment committees, and that certain director elections will be eliminated.

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