Feinberg: Biz journalists critical to conversation about executives’ compensation

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By JANET H. CHO, 2010 SABEW Benita Newton Scholarship Award Winner

PHOENIX — Kenneth Feinberg doesn’t like being known as the “compensation czar.”

Even though it’s shorter and catchier than his official title as special master appointed to oversee executive compensation at companies who’ve received TARP funds, Feinberg told business journalists at Friday’s opening of the 2010 Society of American Business Editors and Writers conference that the term suggests he wields much more power than he does.

When in actuality, he said, his authority as outlined by Congress is limited to the top 100 executives at the five companies still trying to repay the money they borrowed from the federal government to stay in business. Those five companies are: AIG, General Motors, GMAC, Chrysler and Chrysler Financial (Bank of America and CitiCorp repaid their debts, plus interest, in 2009).

“I’m the guy who says (to the top 25 people at each company), ‘All right, you will make total compensation of X or Y,'” Feinberg said.

He tells companies: “You said your CFO should make $1.3 million a year; my data says that CFO should make $950,000 a year.” He also sets the compensation structure that determines the salaries for employees No. 26 to No. 100 at those firms.

But companies often dispute what he says, citing how valuable a certain employee is, how much more she does for the company than her title suggests, and how impossible it would be to replace her if she jumped ship for another firm overseas, initiating a back-and-forth that he concedes sometimes ends up changing his mind.

Even those who accept his decisions grumble about “being put at a competitive disadvantage.”

Feinberg said the fact that he has the power to decide how much some Wall Street executives should get paid raises questions not only about how companies determine compensation in the first place, but also about the kinds of people who are in charge of such decisions. He said business journalists play a crucial role in keeping the public informed about how corporations function, what shareholders want to know, and what government can and can’t do.

“I like to think that I’m having an impact (on that conversation), but on the other hand, there’s a limit to what I can do,” he said.

On the verge of announcing next week how much those executives will make in 2010, Feinberg added: “There are people in this room, I’m convinced, who could do what I’m doing — and do it better.”

Feinberg was the featured opening speaker at SABEW’s annual conference, which runs through Sunday. More than 300 journalists, academics, students and exhibitors are registered for the event, held this year at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication.

Cho is a business reporter for The Plain Dealer in Cleveland and National Vice President/Print of the Asian American Journalists Association.

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