October 22, 2009
Special Master Feinberg Forces Serious Pay Cuts
– Broc Romanek, CompensationStandards.com
Yesterday, Special Master Kenneth Feinberg revealed the details of the long and contentious negotiations over the pay levels for the top 25 paid executives at five financial institutions and two automakers that received TARP money. Although Feinberg’s plan itself hasn’t yet been made public (but will be later today or within the next day or so), the details of the plan are fully reported in numerous articles in the papers today.
It appears that the key components of this pay reform include:
– About a 50% overall compensation cut
– Salary cuts of about 90%
– Some of the reduced salaries replaced with restricted stock, vesting immediately but paid out in one-third per year installments after a two-year waiting period
– Limits on perks, with anyone receiving more than $25k having to seek special permission
Here are articles from today’s newspapers describing this story:
– NY Times’ “U.S. to Order Steep Pay Cuts at Firms That Got Most Aid”
– NY Times’ “A New Challenge for 2 Ailing Banks”
– NY Times’ “Who Gets Paid What”
– Washington Post’s “U.S. to cut pay for bailed-out bosses”
– WSJ’s “Pay Czar to Slash Compensation at Seven Firms”
– WSJ’s “Pay Czar Moves Represent ‘Seismic Shift’”
– Forbes’ “Pay Czar Readies Knife“