Corporate pay

The federal bailout of corporate America has opened board-room doors to increasing government intervention.

Using the aid as leverage, Washington is subjecting the compensation of hundreds of executives to review by federal pay czar Kenneth Feinberg. He has to sign off on compensation packages for the 175 highest-paid employees at seven companies that received assistance through the $700 billion emergency rescue plan.

Mr. Feinberg may go even further in using that authority to tell companies how those executives can be paid. Corporations are free now to offer cash, stocks or a combination of benefits to employees.

However, according to the Wall Street Journal, Mr. Feinberg may use that authority to dictate how companies compensate their employees. One proposal under consideration would divert part of the salary into stock that could not be accessed for a number of years.

In once instance already, Mr. Feinberg prevailed on American International Group Inc. to pay its new chief executive $3 million annually in cash and $4 million in stock that cannot be accessed for five years, the Journal reported.

The assumption is that executives will be less likely to take risks that could also jeopardize their future stock holdings.

But current and future salaries are not the only ones being targeted.

Mr. Feinberg is reviewing the compensation package of Bank of America's retiring chief executive Ken Lewis. He will not receive a golden parachute with special benefits and perks. However, he has reportedly accumulated pension and stock holdings worth $126 million, an amount earned during a 40-year career with the bank.

Critics may decry the sum as outrageous and another obscene example of corporate excess, but Mr. Lewis earned the benefits that some would like to be denied.

Mr. Feinberg has expressed doubts about "clawbacks," saying he was "not sure it's a good idea if the Department of Treasury is seeking to recover through cajoling or litigation monies that may already have been spent."

No doubt, though, there will be those who want him to do just that. And if Mr. Feinberg can do so for Mr. Lewis, who else might find themselves deprived of benefits they earned in the future?

Mr. Feinberg, for now, is doing his job. But the sooner he is out of work, the better. Government is ill-suited to decide compensation levels or payment plans. They are better left to the marketplace, corporate boards and stockholders.