Pay czar cautious, but ready for role
Share Now on:
TEXT OF INTERVIEW
Kai Ryssdal: Yesterday the White House outsourced its supervision of executive compensation. The president named longtime Washington mediator Kenneth Feinberg to manage pay packages at some of the biggest companies that took bailout money from the TARP. That’s the likes of Citigroup and Bank of America and General Motors, too. Mr. Feinberg, good to have you with us.
Kenneth Feinberg: Thank you.
Ryssdal: How much power do you have in your new job?
FEINBERG: Well, the law grants to the secretary who delegates to me the authority to determine compensation packages for 175 senior executives of the seven largest corporate top recipients. The law also permits me, or requires me, to design compensation programs for these recipients, governing overall compensation of every senior official. And finally, the law gives me great discretion in deciding whether I should seek to recoup funds that have already been distributed to executives by top recipients. So it’s a substantial delegation of power to one person.
Ryssdal: How are you going to make up your mind? Are you going to sit down and review market-based compensation schemes and all that sort of stuff that regular human resources compensation professionals do?
FEINBERG: Oh, I think that will be part of it. I think the regulations lay out some variables that I must consider in deciding compensation, profitability of the company, merit pay, whether or not loss of officials will inhibit or undercut competitiveness of that company. There’s a wide range of factors that I will consider in consultation with the companies themselves.
Ryssdal: Do you buy, speaking of those companies, do you buy their argument that compensation limits on their executives will make them, just by market forces alone, lose talent to people who can pay?
FEINBERG: I don’t think there’s any question about that. Now, that’s not the only variable, of course. I mean there are other variables that have to be considered. But I think I would have blinders on not to recognize that in some companies, in some respects, the failure to compensate adequately will put a company at a distinct disadvantage prospectively. That is certainly one factor that should be considered in the overall effort to regulate pay.
Ryssdal: Well, given that, then, and given the fact that executive compensation is a very hot political issue on Capitol Hill now and on Wall Street as well, is it possible do you think that the Treasury secretary gave you a job that he was not eager to do himself?
FEINBERG: Oh, you’ll have to ask the secretary that. I don’t think it’s a question of he’s not eager to do it himself, I think it’s a question of immersing oneself in this one major area of public policy, when the secretary is engulfed in 100 different major areas of public policy. And I must say that although you are absolutely correct that there is a real populist strain in this country where the citizenry is rightfully upset at the compensation levels of some of these executives, there’s also a prevailing view, that you hear all the time, I’m sure you’ve heard it: It’s none of the government’s business to insinuate itself into private marketplace compensation decisions. So there’s the real tension that I confront.
Ryssdal: Kenneth Feinberg is the new special master for compensation for the Treasury Department. He’s working pro bono, I should add. Is that right Mr. Feinberg?
FEINBERG: That’s correct.
Ryssdal: Thanks very much for your time, sir.
FEINBERG: Thank you very much.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.