Obama’s ‘pay czar’ no stranger to big paychecks

By Karey Wutkowski and Steve Eder, Reuters August 28, 2009


WASHINGTON — The “pay czar” tasked by the U.S. government with ruling on the eye-popping compensation of some of Wall Street’s top earners is far from a stranger to big paychecks and the trappings of wealth.

Kenneth Feinberg made $5.76-million last year as a partner in his Washington law firm, Feinberg Rozen LLP, according to a government ethics filing obtained by Reuters.

And his assets, which include a stake in his law firm, two homes and dozens of investments, are worth anywhere from $11-million to $37-million, according to the filing, which places assets in broad value categories.

His homes are a $1.66-million house in Bethesda, Maryland, near Washington, and a $1.96-million vacation home in West Tisbury, Massachusetts, on Martha’s Vineyard. And he has investments in a series of public companies, including eBay, Wal-Mart Stores Inc, Pepsico Inc, Bed Bath & Beyond Inc and Berkshire Hathaway Inc — though none in the banking and auto companies bailed out with government money, Mr. Feinberg’s ethics filing shows.

In addition to income from his law firm last year, Mr. Feinberg also reported gains on his investments, including dividends, and $53,624 received from eight law schools, including New York University, Georgetown University and University of California, Los Angeles.

He also reported $32,200 in income from his interest in Strategic Settlement Advisors Inc, a Washington claims settlement company. And he sold his stake in a real estate development on Jekyll Island in Georgia last year, making up to $1-million on the sale.

Seven companies still locked in the U.S. Treasury’s Troubled Asset Relief Program, including Citigroup Inc, American International Group Inc and Bank of America Corp, have had to submit proposed compensation plans for their 25 highest-paid employees to Mr. Feinberg. He also has oversight over compensation for the best paid at Chrysler Financial, Chrysler Group LLC, General Motors Co and GMAC Inc.

While Mr. Feinberg, who was appointed in June, is working for free as the “pay czar,” the fact that he is wealthy could bring some solace to critics on Wall Street who believe his lack of experience in the realm of executive compensation could color his decisions on how the top executives at major firms are compensated.

If he is successful and he is compensated as a successful person, it certainly gives him a different view on the evaluation of other successful people,” said Charles Elson, the director of the Weinberg Center for Corporate Governance at the University of Delaware. He said Mr. Feinberg’s salary would make him more sympathetic to other high-earners and more likely to enjoy a similar lifestyle.

After all, Mr. Elson said, “He’s being paid like a Wall Street lawyer.

Still, Mr. Feinberg’s mission is not to judge the number of zeros.

If you asked a citizen who earned considerably less than that to opine on whether payment was excessive or not, they might have a different answer from Kenneth Feinberg,” said Paul Hodgson, a compensation expert at independent research firm Corporate Library. “On the other hand, I think what he’s supposed to be looking at is not whether payments are excessive in size, but whether they are correctly structured and could encourage excessive risk taking.”

There may also be some questions about whether Mr. Feinberg, who remains a partner at his law firm, has any conflicts of interest, though the disclosures in his ethics filing are far from damning.

According to his law firm’s web site, three of the institutions whose compensation he is supervising are clients of the firm or have participated in mediation with it: Citigroup’s Citibank, AIG and Merrill Lynch, now part of Bank of America.

But the ethics filing, which lists four dozen firms as sources of income, shows Mr. Feinberg was a court-appointed ”neutral” mediator and did not represent the companies.

Mr. Hodgson said Mr. Feinberg’s legal work with firms that have received billions of taxpayer dollars — such as AIG and Citigroup — could be an asset.

I guess he’s occupying a similar kind of position now, being a mediator between Treasury and the banks themselves,” Mr. Hodgson said, adding that Feinberg’s prior work should have been made public at the time of his appointment.

A one-time chief of staff to Senator Edward Kennedy, Mr. Feinberg is also active politically, making more than $300,000 in campaign contributions since 1990, mostly to Democrats, according to the Center for Responsive Politics. The recipients include Barack Obama, Hillary Clinton and Christopher Dodd, chairman of the Senate Banking Committee.

He also serves on the boards of a series of non-profits, including the John F. Kennedy Library Foundation, Human Rights First, the Washington National Opera, and RAND Institute for Civil Justice.

He spreads his own banking across three institutions — Bank of America, Wells Fargo & Co’s Wachovia, and Swiss bank UBS.

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