Pay czar for bailed-out firms says he can ‘claw back’ money

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The Obama administration’s pay czar for bailed-out companies, Kenneth Feinberg, sounds like he’s taking the czar title very seriously.

From an interview he did with Reuters:

Feinberg said on Sunday he has broad and ‘binding’ authority over executive compensation, including the ability to ‘claw back’ money already paid, and he is weighing how and whether to use that power.

Feinberg has been consulting with seven companies that have yet to pay back money they borrowed from the government: Citigroup, American International Group, Bank of America Corp., Chrysler Financial, Chrysler Group, General Motors and GMAC.

Those companies faced a deadline of Friday [to submit]proposals to Feinberg for their top 25 employees.

He also said he has the authority to use a ‘clawback’ provision to go after compensation for executives from any company that received money from the U.S. Treasury’s Troubled Asset Relief Program (TARP).

In other words, even companies that have already repaid TARP funds, such as Goldman Sachs Group, could be subject to clawbacks.

But Feinberg’s focus in the near term is the seven companies named above. The 63-year-old attorney has been given the job of determining whether pay agreements are fairly based on performance and whether they could encourage reckless risk-taking.

His initial findings on the compensation packages of the seven major bailout beneficiaries will be due in about 60 days.

More from Reuters:

Feinberg said the law requires him to take market forces into account [on pay], but also to consider performance and past deals between a company and an employee.

‘The statute provides these guideposts, but the statute ultimately says I have discretion to decide what it is that these people should make and that my determination will be final,’ Feinberg said.

‘The officials can’t run to the Secretary of Treasury. The officials can’t run to the court house or a local court. My decision is final on those individuals,’ Feinberg added.

-- Tom Petruno