Pre-empting The Pay Rules
Speaking of czars, the White House's pay czar, Kenneth Feinberg, wants to cut salaries for firms receiving lots of TARP money:
The Obama administration's pay czar is planning to clamp down on compensation at firms receiving large sums of government aid by cutting annual cash salaries for many of the top employees under his authority, according to people familiar with the matter.
Instead of awarding large cash salaries, Kenneth Feinberg is planning to shift a chunk of an employee's annual salary into stock that cannot be accessed for several years, these people said.
This would be a major shift to really cut into take-home pay at places like Bank Of America and Citigroup. Finally they will feel some measure of pain for their roles in crushing the economy... 'scuse me?
Several firms that received large taxpayer bailouts have adjusted executive compensation to trim cash payouts before the Obama administration's pay czar issues new rules. Some fear those rules will go too far, preventing them from attracting the talent they need to remain competitive.
Company officials and lobbyists say Bank of America Corp., Citigroup Inc., GMAC Financial Services Inc. and others are reworking their pay plans to ensure compensation reflects executive performance. They are giving executives more of their compensation in stock and stock options, and spreading pay over a longer period. And they are adopting plans to recapture some pay when bets go bad.
Kenneth Feinberg, the Treasury Department's special master for executive compensation, is expected by next week to announce compensation guidelines for the top 75 earners at the seven firms that received the most taxpayer money. His rules are expected to include some of the same measures companies already have adopted.
I guess acting in advance of the pay rules is tantamount to implementing them, and these new rules are setting the standard for the industry, with even Goldman and JP Morgan employees getting paid more in stock than cash, so it's a win all around, no?
Well... except one-third of Wall Street expects a bigger bonus this year. And it's not clear how bonuses, especially in terms of stock options, would factor into the pay scheme. Believe me, if there's a loophole, the banksters will find a way to exploit it.