And Now ... A Federal Compensation Czar

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?

I know that at least one of my Cafe colleagues is planning a post on this appointment as well: stay tuned for more!

Additional information in the articles noted below...

New York Times:  Obama Names Overseer to Set Pay at Rescued Companies

Time.com: Kenneth Feinberg, Compensation Czar

Wall Street Journal:  White House Set to Appoint a Pay Czar

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School, enjoys reading in her spare time and is currently trying to decide whether to follow her daughter to China this summer.  Follow her on Twitter at @annbares.

Comments

[working girl]

I think it shows promising impartiality. But targeting 175 people doesn't seem to make much of a dent, as conspicuously overpaid as some of them may be. I doubt their collective salaries add up to anything like $700 billion and that's kind of what we need to be saving.

[Darcy Dees]

We all obtained a great deal of education and experience to be where we are today in the Compensation field. This appointment seems to ignore the fact that there are experts in the field that could contribute more knowledgeable recommendations. It will be interesting to see where this goes.

[Paul Weatherhead]

The new administration called for a new era of transparency, and the new czar is calling for better transparency.

Isn't it ironic that the proliferation of "czars" in this administration is meant to circumvent the regular process of selecting government leaders through a transparent process!