Just in time for Christmas, pay czar Kenneth Feinberg has clamped down on the salaries of midlevel employees at bailed-out companies. But the broader targets are not just bailed-out firms, of course. The power-grabby pay czar wants his limits to be adopted industry-wide.
Bah-humbug, via MarketWatch:
The Obama administration’s pay czar announced on Friday new limits on the pay of middle-level executives at four firms that received government bailout assistance, capping base cash salaries for those employees at $500,000.
The new limits will cut pay for the 26th to 100th highest-paid employees at the four firms under his authority and mandate the form of the compensation and limit perks.
Kenneth Feinberg said he hopes the new pay guidelines will set the standard for U.S. compensation practices. The thrust of the guidelines is to tie executive compensation more closely to the performance of their firms.
The firms covered by the limits are American International Group (AIG 27.57, -1.36, -4.71%) , Citigroup (C 3.92, +0.05, +1.29%) , General Motors and GMAC (GMA 18.75, -0.10, -0.53%) . Chrysler and Chrysler Financial are not covered because they are not paying any employees at this level over $500,000.
The rules limit base cash salary to $500,000. There were less than a dozen exemptions granted to this limit. Feinberg said he agreed in these cases that the companies might lose the key employee to a competitor unless the salary was higher.
Feinberg said there were quite a few requests for exemptions. Only one employee at one firm will receive over $1 million
Under the new rules, total cash may not exceed 45% of total compensation. The rest must be in company stock. There are no “run-away” bonuses because all incentive pay must come from a fixed pool, Feinberg said.
Here’s the fact sheet for the new rules.
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