WASHINGTON -- 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. Such a move, the most intrusive yet into corporate
compensation, would mark the government's first effort to curb the
take-home pay of everyone from auto executives to financial traders.
Feinberg is expected to issue by
mid-October his determination on compensation packages for 175 of the
most-highly compensated executives and employees at the seven firms he
oversees. The companies are: American International Group Inc., Bank of
America Corp., Citigroup Inc., General Motors Co., GMAC Financial
Services Inc., Chrysler LLC and Chrysler Financial.
The move will further reshape pay at those firms and could complicate efforts by some of those seven companies
to attract top executives and employees.
issue could be particularly acute for Bank of America, which is
searching for a successor to Kenneth Lewis, who announced plans to
resign as chief executive of the company last week. A Bank of America
spokesman said the bank declined to comment on compensation issues
regarding the chief executive. "We have been in close communication
with Feinberg and our compensation going forward is very much in line
with his guidance," the spokesman said.
administration has tasked Mr. Feinberg with more closely tying compensation to long-term performance, something the White
House believes will help prevent employees from taking unnecessary risks for short-term gains. A government official said
shifting some salary away from cash and into stock will help achieve those goals.