Panel report finds flaws in executive pay program
TEXT OF STORY
JEREMY HOBSON: The Congressional panel that oversees the $700 billion TARP rescue has just released a report on executive pay at bailed out financial institutions. The report says Ken Feinberg, the Pay Czar or Special Master, as he’s called, successfully cut compensation. But failed to make long-lasting changes to the Wall Street pay structure.
Former Democratic Senator Ted Kaufman chairs the Congressional Oversight Panel and he joins us now. Good morning, Senator.
TED KAUFMAN: Good morning, Jeremy.
HOBSON: So when Congress set up the bank bailout, members wanted to make sure that financial institutions were not going to use the bailout money to give out big bonuses and executive compensation. You’ve been looking into this. How’d they do?
KAUFMAN: They did OK. What the report found is that on the companies covered, the overall compensation fell by an average of 55 percent, and the maximum pay out was in the are of $500,000 in cash. In addition to that they did move to more to stock from cash.
HOBSON: So, that there’s a long term incentive to make sure that deals are good.
KAUFMAN: Right.
HOBSON: There are a lot of people including a number of people in Congress who get pretty queezy when they think about the government setting pay levels at private institutions. What would you say to those people?
KAUFMAN: Whenever you are on the ideological spectrum, you’ve got to believe that if in fact you take Federal government money, then you are going to have to abide by their rules. But I do think that most people believe, and I believe that executive compensation has gotten out of hand.
HOBSON: You think we missed an opportunity with the strings that were attached to the TARP.
KAUFMAN: What we had hoped for and what the Special Master had hoped for was that this was going to be a model, but it doesn’t look like it’s going to turn out that way. Most of the experts think that this had a modest impact. And the reason for this what that this is a lack of complete transparency in how the Special Master reached his opinions. It’s awful hard to replicate what he did if you don’t know the details of what it is that he did.
HOBSON: Former Senator Ted Kaufman, chair of the Congressional Oversight Panel. Thanks for your time this morning.
KAUFMAN: Thank you Jeremy. It’s always a pleasure.
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