White House Highlights New Powers As Citi Eyes Raising Pay
24 Juni 2009 - 11:20PM
Dow Jones News
Amid news that base salaries at Citigroup Inc. (C) could rise,
the Obama administration Wednesday reiterated that it has
significant power to make sure compensation practices at
government-rescued financial companies are reasonable.
Citigroup aims to change its compensation practices to rely less
on bonuses, and that means base salaries might rise.
Still, the bank has said that any adjustments won't increase
overall compensation of employees affected by the change.
Without particularly naming Citigroup, the administration
released a statement to point out that companies such as Citigroup
that have received substantial taxpayer dollars will have to
persuade the administration that their pay policies strike the
right balance.
Specifically, Citigroup and the six other companies receiving
exceptional assistance from the government will have to face
Kenneth Feinberg, the new pay czar at the Treasury Department.
He "has broad authority to make sure that compensation at those
firms strikes an appropriate balance," an administration official
said in a statement Wednesday.
Feinberg oversaw the government's efforts to compensate Sept. 11
victims as was recently appointed as a new "special master" at
Treasury to review compensation practices at: Citigroup, American
International Group Inc. (AIG), Bank of America Corp. (BAC),
General Motors Corp. (GMGMQ), GMAC LLC, Chrysler and Chrysler
Financial.
The reviews are part of a broader push by the administration to
encourage changes in pay practices at companies so that they don't
encourage the kind of excessive risk taking that has been blamed
for helping to push financial markets into crisis.
The administration official said Feinberg has already started up
discussions with the seven companies about their compensation
plans.
At the same time, the administration official added that the
Treasury has no desire to run the day-to-day operations of private
companies, regardless of whether they have received bailout
funds.
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255;
maya.jackson-randall@dowjones.com
(Matthias Rieker in New York contributed to this story.)