By on July 27, 2009

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.

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15 Comments on “Federal Pay Czar to Clamp Down on GM, GMAC, Chrysler, Chrysler Financial Exec Pay...”


  • avatar
    PeteMoran

    Oh, boo-hoo; anyone on Wall Street that doesn’t like it can easily get another job.

  • avatar
    montgomery burns

    We have to pay them those million dollar bonuses. If we don’t how can we attract the type of talent that we need to drive a company into the ground.

  • avatar
    chuckR

    The process of appointing all these czars while circumventing the oversight vetting of Congress is disturbing. The administration ostensibly has solid majorities in both Houses. Here is the rule of whim, not law. I don’t think much of either Congress or the administration (clowns to the right of me, jokers to the left), but we and they should be ruled by law.

    That said, Feinberg is an interesting choice. He is the man who negotiated settlements in the 9/11 terror bombings and kept all but a handful of potential lawsuits out of court. He didn’t get that done by cutting offers to the bone in the all too typical adversarial approach. None of the people in his sights will become destitute, regardless of how deserving they are of that fate.

  • avatar
    superbadd75

    My opinion is that any of those bastards that assisted in running their respective company into the ground is lucky to have any compensation at all.

  • avatar
    volvo

    Whew

    It’s a good thing that Goldman Sachs didn’t take any TARP money. They just missed a bullet.

  • avatar
    rnc

    “The process of appointing all these czars while circumventing the oversight vetting of Congress is disturbing. The administration ostensibly has solid majorities in both Houses. Here is the rule of whim, not law. I don’t think much of either Congress or the administration (clowns to the right of me, jokers to the left), but we and they should be ruled by law.”

    I believe that they (the administration) were given these powers/ability to make these kinds of appointments and institute rules by congress when TARP and all were authorized. Kind of congress’s way of approving things that the majority wanted (demanded) at the time, but if those things go wrong or have unintended consequences they can wash thier hands of and point fingers.

    It is the american political machine working the way they want it too (not the way it was intended too, they were originally supposed to do what was best for the country first, while looking after states’ rights, not doing what is most likely to get them re-elected and the perks (donantions) that come with it at any cost that they won’t be alive to pay)

  • avatar
    jkross22

    Pay for performance. A radical concept usually reserved for the unwashed, but perhaps a new way of thinking about executive compensation.

    Better yet, if you don’t perform, you’re fired.

    On second thought, nah.

  • avatar
    Airhen

    superbadd75 :
    July 27th, 2009 at 10:42 am

    My opinion is that any of those bastards that assisted in running their respective company into the ground is lucky to have any compensation at all.

    Then ditto about the UAW.

  • avatar
    superbadd75

    Then ditto about the UAW.

    I’ll go for that as well. Truth be told, the people that put GM and Chrysler in the shitter seem to be the ones being rewarded the most now. The UAW gets a stake in both companies, and GM’s execs are allowed to occupy offices at RenCen and do business as usual. This whole thing is nonsense, but we should have all known that government involvement in the situation would do absolutely nothing.

  • avatar
    Telegraph Road

    Chrysler Financial repaid its $1.5b loan + $4.45m interest last month.

  • avatar
    quasimondo

    So why should we be upset at ensuring our tax dollars aren’t being tossed at underpeforming executives?

  • avatar
    chuckR

    We should be upset that Congress is cravenly giving up its oversight responsibility.(Thanks to rnc for the clarification.) I have no problem with under-performing execs being marked to market.

  • avatar
    quasimondo

    Their oversight responsibility resulted in meddling with necessary reductions in GM and Chrysler’s bloated dealer networks, forcing underutilized plants to remain open, and generally impeded with restructuring efforts aimed at turning GM and Chrysler into a leaner meaner company.

    I applaud this decision of one bloated bureaucracy to steer clear of trying to control another bloated bureaucracy. It would’ve been like finding out what happens when an immovable objects collides with an immovable object.

  • avatar
    Robert Schwartz

    GM and Fiatsler are wholly owned subsidiaries of the US government. As such their white collar employees should be paid according to the General Schedule. Not enough, so what? They are going down and going down hard, and with our money. So why pay them.

  • avatar

    # Robert Schwartz :
    July 27th, 2009 at 9:28 pm

    GM and Fiatsler are wholly owned subsidiaries of the US government. As such their white collar employees should be paid according to the General Schedule. Not enough, so what? They are going down and going down hard, and with our money. So why pay them.

    Actually, GS federal employees have a better benefit package than salaried GM workers.

    GS employees make about double the private sector avg.


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