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Bailed Out Execs Now Have a Salary Cap

Now that we all have universal health care (wait? It doesn’t really kick in for four more years? Oh), the White House has given us another piece of progress from the “probably should have happened a long time ago” file.

Yes, now that only a handful companies are still benefitting greatly from public assistance, the administration has agreed to cap the pay for the top 25 executives of the five companies “still receiving extraordinary aid” via bailout. And really, it’s more like three companies since it comes down to only AIG, GM and its financing company GMAC, and Chrysler and its financing company Chrysler Financial.

Feinberg’s announcement was the administration’s latest effort to deal with public outrage over bonus payments provided to executives at companies receiving billions of dollars in taxpayer support.

Detailing the 2010 pay rules, Feinberg said cash salaries would be capped at $500,000 for 82 percent of the top 25 executives at the five firms. These executives would have to receive any further compensation in stock. Feinberg is seeking to link the executives’ decisions more closely to the success of their companies.

In addition, “pay czar” Kenneth Feinberg is also mandating that 419 companies that benefitted from bailout money before February 17, 2009, give detailed information on any salaries in excess of $500,000 paid to executives in late 2008 and early 2009. What exactly Feinberg plans to do with this information eludes me, but companies have 30 days to comply.

Under the law, Feinberg cannot require executives to return any compensation such as 2008 bonuses that he deems excessive. But Feinberg said he would review the compensation paid during that period to see if any of it could be deemed “inconsistent with the public interest.”

I think many interested members of the public could tell Kenneth their thoughts on that topic immediately, but it’s nice to know that he will have some more detailed info into the matter next month.

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Before the cap, he would have been carrying three bags.

AIG Execs Finally Do Right

It seems it was too much weight on the conscience of those AIG executives who received undeserved bonuses. Or maybe it was the call from New York Attorney General Andrew Cuomo to each of the 20 executives who received the highest rewards that did it. Either way, 15 of the 20 have paid back their entire bonus. Cuomo stated that approximately $50 million of the $165 million has been returned so far and he expects even more AIG employees will hand over their loot.

Cuomo said he expects to recoup about million, which accounts mostly for the amount paid to American employees. Bonuses paid to non-Americans will be difficult to recoup since it is out of their jurisdiction.

The Treasury Department, citing documents from AIG, said bonuses ranged from $1,000 to nearly $6.5 million for more than 400 employees and future employees. Seven employees received more than $3 million. Awards of $1 million or more were paid to 73 employees, including 11 who no longer work there.

“I applaud the employees who are returning their bonuses,” Cuomo stated late yesterday. “I think they are being responsive to the American people.”

Well done Mr. Cuomo, but are the American people satisfied with an expected return of only half of the total amount paid out?

Rewarding Failure

AIG created a firestorm over the weekend when it announced it would pay an additional billion in bonuses to its top executives, claiming they are tied to the payouts by contract.

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Americans were furious after learning their taxpayer money would go towards rewarding executives of the insurance giant who were, for the most part, responsible for its fall.

Treasury Secretary Timothy Geithner called AIG Chief Executive Edward Liddy, demanding a slash of the enormous bonuses. In response, Liddy claimed that AIG’s “hands are tied” and the contracts which promise the bonuses are “legal, binding obligations and we must proceed with them.”

But it’s the government – how can they NOT intervene? It’s our money THEY gave to AIG. This is what has outraged not only tax-paying Americans, but various state politicians and Obama’s economic team as well. Christina Romer, chairwoman of the administration’s Council of Economic Advisors, told NBC’s “Meet the Press” that the administration is “pursuing every legal means to deal with this.

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Will the Obama administration be able to stop these completely unearned, taxpayer-fed bonuses from ending up in AIG executive’s bank accounts? It’s doubtful. The most we can hope for is a bonus reduction or postponement, so alas, it seems we, the American taxpayers, will be funding the lucrative bonuses of failed AIG executives.

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And Americans inch closer to COMPLETE lack of confidence not only with America’s top corporations, but with their own government as well.