Kenneth Feinberg, the Obama administration's special master for executive compensation, said he is "very concerned" about the possibility his pay cuts may drive talent away from companies bailed out by U.S. taxpayers.
"Maybe I've struck the right balance," Feinberg said, referring to criticism that he has been too harsh and too easy on executives. "Hopefully some of this will percolate into the private sector. We'll have to see," he said Thursday at a Washington conference held by Bloomberg Ventures, a unit of Bloomberg LP, the parent of Bloomberg News.
Feinberg has ordered pay cuts averaging 50% for the top 25 executives at Citigroup Inc., Bank of America Corp., American International Group Inc. and four other companies that took U.S. bailout money. Feinberg will rule on pay structures covering the next 75 highest-paid employees at those firms by the end of this year.
"I'll measure my success, really, if these seven companies repay the taxpayer. That's really the litmus test," he said.
Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.'s investment bank, which are all exempt from Feinberg's oversight, will hand out a combined $29.7 billion in bonuses, according to analysts' estimates. That would be up 60% from last year and more than the record $26.8 billion in 2007. The companies are the biggest banks to exit the Troubled Asset Relief Program.
Feinberg said that AIG Chief Executive Officer Robert Benmosche, who took over the insurer in August, had "expressed his concern that compensation keep his people on board and that the company thrive."
Feinberg said he has met with chief executives "one or two times over the last few months."
In a letter to AIG employees on Wednesday, Benmosche said he remains "totally committed" to leading the insurer after media reports suggested he told the board he may step down because U.S. pay caps hurt his ability to retain staff.
Benmosche released the letter after The Wall Street Journal reported Nov. 10 that he told directors last week that he might resign because of U.S. restrictions on employee compensation. Benmosche, who came out of retirement to lead AIG, said he is "frustrated" with limits on what it can pay its top 100 executives.