Mark Calabria notes how the form of salary scheme at financial institutions played no apparent role in sparking the financial crisis. But that hasn’t stopped the federal pay czar from boasting about his power, even to regulate compensation set before he took office.
Reports the Martha’s Vineyard Times:
Speaking to a packed house in West Tisbury Sunday night, Kenneth Feinberg rejected the title of “compensation czar,” but he also said said his broad and “binding” authority over executive compensation includes not only the ability to trim 2009 compensation for some top executives but to change pay plans for second tier executives as well.
In addition, Mr. Feinberg said he has the authority to “claw back” money already paid to executives in the seven companies whose pay plans he will review.
And, he said that if companies had signed valid contractual pay agreements before February 11 this year, the legislation creating his “special master” office allowed him to ask that those contracts be renegotiated. If such a request were not honored, Mr. Feinberg explained that he could adjust pay in subsequent years to recapture overpayments that were legally beyond his reach in 2009.
This isn’t the first time that federal money has come with onerous conditions, of course. But it provides yet another illustration of the perniciousness of today’s bail-out economy.