Treasury Department Pay Czar Kenneth Feinberg criticized 17 companies on Friday, which received federal bailout funds, for handing more than $1.6 billion in excess compensation at the height of the financial crisis, adding that Citigroup, Inc (NYSE: C) was the worst offender of the group paying out more than $400 million in excess pay to its executives.
Other firms which were named included Goldman Sachs Group Inc. (NYSE: GS), Bank of America Corp (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), Morgan Stanley (NYSE: MS), AIG and Capital One, Boston Private Financial Holdings, CIT, M&T Bank, SunTrust, Bank of New York Mellon, Regions Financial, PNC Financial and U.S. Bancorp.
Kenneth Feinberg, who was appointed as a special master for compensation for the Obama administration, reviewed executives earning more than $500,000 at the 419 companies that received taxpayer assistance. Out of the 17 companies that he found were egregious in their compensation, 11 have paid back the assistance received from taxpayers.
The report said that companies did not do anything illegal and that 90% of the executive payments were made by firms which have fully repaid taxpayers, however, Feinberg recommended that companies adopt an emergency provision which would let them break pay contracts if a second financial crisis occurred. He said that if a company’s board of directors determine the firm was in a crisis, the company’s compensation committee would be allowed to reconsider pay levels. During the financial crisis, many companies protested that they were legally obligated to meet their payment contracts with executives.
The paymaster reported only a small group of the 419 companies which were examined was excessive. The report said that out of the group, 240 companies did not hand out any executive pay. 116 firms handed out too much money to five or fewer executives.
