The Wall Street Journal reports that the new federal “pay czar” Kenneth Feinberg is about to cap the execs working for GM, GMAC, Chrysler and Chrysler Financial. Well, restructure or “renegotiate” their salaries, bonuses and benefits. As Dan Rather might say, what’s the frequency, Kenneth? Less obliquely, the four auto industry recipients, all of whom owe their existence to billion dollar blessings from the Troubled Asset Relief Program (TARP), must send Ken new exec pay, perks and bennies guidelines by August 13. At which time the man originally tipped to be President Obama’s Car Czar (mooted by a 25-member task force) will decide whether or not he likes their proposals. If he doesn’t . . .
Mr. Feinberg can’t rip up legal contracts. But he is expected to push firms and employees to renegotiate payments he deems too high, said people familiar with the Treasury’s plans. If that can’t be done, they said, Mr. Feinberg is expected to factor the amount of a contract into an employee’s overall pay and use that calculation to bring down total compensation. For instance, if an employee were legally guaranteed a $1 million bonus for 2009, Mr. Feinberg might subtract that amount from the employee’s 2009 base salary, or cut the employee’s future pay to compensate for that amount.
See? The feds can’t even be straightforward when they’re water-boarding the free market. Yes, I know: he who pays the piper gets to prevent a voter backlash that could end the government’s ability to intervene in private enterprise (via hundreds of billions of dollar in taxpayer funds) to save corporations from their own incompetence so that they don’t die and ruin the entire US economy. But still, what kind of nonsense is this? Or, for that matter, this:
Among the things he will examine is whether a firm’s compensation rewards risk, is comparable to that of peers and is tied to long-term performance. His decisions aren’t subject to appeal, and he is operating largely independent of the Treasury Department. Mr. Feinberg, an attorney, isn’t receiving government compensation for his work.
Czar by name, Czar by nature. To those employees whose dreams of a Utah ski house are about to die, we salute you.