By now, many of you have heard that the Obama administration has appointed a Compensation Czar whose responsibility it will be to set salaries and bonuses for 175 top executives at seven of the nation's largest companies - companies who have received federal bailout funds.
The new official, Washington lawyer Kenneth Feinberg (recommended for the post by Connecticut Senator Chris Dodd) is best known for having served as Special Master of the Federal September 11th Victim Compensation Fund, a role in which he spent several years overseeing payouts totaling $7 billion to victims of the September 11 attacks. In this capacity, he was responsible for investigating claims and ultimately putting a value on the lives of the victims in order to determine government benefits to be paid out. An overwhelming challenge, at which - it appears by most accounts- Mr. Feinberg did an extraordinary job. He captured his experiences in a 2005 book "What is Life Worth?".
While Mr. Feinberg appears to be an individual of exceptional capability, I see his selection for this new role as both interesting and revealing.
The fact that administration officials and Senator Dodd chose a Washington attorney and gifted arbitrator/negotiator rather than a private sector business leader, corporate governance expert or even (gasp) someone seasoned in executive compensation design/administration says a lot about their perspectives on the structuring and administration of executive rewards.
At least that's what I think. Your take?
More in the articles noted below...
New York Times: Obama Names Overseer to Set Pay at Rescued Companies
The idea that one who presided over large-scale gifting is considered best suited to judge exec comp is revealing, in itself. As I posted over at the WorldAtWork Public Policy blog earlier today:
Generalities abound, but no specifics and no input from compensation people at any level that I could see. Get Fred Cook, Bud Crysal, Jay Schuster, etc., involved and you might see some meaty common sense. So far, all I see is academics, SEC types and pet attorneys spouting platitudes and engaging in gesture politics.
Posted by: E James (Jim) Brennan | June 11, 2009 at 11:03 AM
Let me see, President Obama campaigned on a platform of greater transparency in the federal government, and his new pay czar wants more transparency in compensation decisions.
But President Obama has appointed a record number of "czars" to bypass the regular transparent process for selecting government leaders.
I guess the lesson is "Do as we say, not as we do!"
Posted by: Paul Weatherhead | June 11, 2009 at 12:02 PM
Jim:
True, true, all true. And, as you say, quite revealing.
Paul:
It would seem that way, wouldn't it?
Posted by: Ann Bares | June 13, 2009 at 02:44 PM