US News And World Report Best Law Firms 2021
Richard J. Lambert was named by Best Lawyers® as a 2021 Corporate Law “Lawyer of the Year.”

Best Lawyers® is the oldest and most respected peer-review publication in the legal profession. Only one lawyer in each practice area in a given community is honored as “Lawyer of the Year.”

Dunn Lambert, LLC

Comprehensive Legal Services For Businesses

In New Jersey And New York call
201-957-0874

Dunn Lambert, LLC

Comprehensive Legal Services For Businesses

In New Jersey And New York call
201-957-0874

Dunn Lambert, LLC

Call

Email

Business Law Professionals

  1. Home
  2.  » 
  3. Commercial Litigation
  4.  » Feinberg Says Businesses Did Not Break Law With Payouts

Feinberg Says Businesses Did Not Break Law With Payouts

| Jul 23, 2010 | Commercial Litigation |

The Wall Street Journal reports today that Kenneth Feinberg, the U.S. “pay czar,” has announced that the 17 financial firms that he investigated as the Obama administration’s special master for compensation used poor judgment but did not break any laws when they gave out excessive payouts in late 2008 and early 2009. The companies gave the payouts at the height of the financial crises, even while they were receiving taxpayer assistance. In 2009, lawmakers created executive-compensation restrictions to prevent future payouts like the ones given by the firms studied by Feinberg and deemed excessive and “ill-advised” by him, such as individual payouts exceeding $10 million.

The 2009 stimulus law created Feinberg’s post and mandated Feinberg complete a study, which would review the five-month window when firms were getting financial assistance from the government but before the law went into effect to restrict over-compensation. Feinberg looked at “highly compensated employees” who were paid more than $500,000 a year and were given cash bonuses, retention rewards, stock grants and golden parachutes during the crises. Feinberg was charged with deciding whether the payouts “violated the public interest.” 

Feinberg concluded that the payouts were “ill-advised,” but did not say they were in violation of the public interest. He also said it would be unfair to ask the companies to return the payouts. He said that, besides being unfair, requesting them to do so might trigger commercial litigation and private lawsuits as well as further Congressional investigation. Feinberg did not have the authority to demand repayment, but could ask for it. Feinberg did not want to ask firms to repay the money, but he did meet with the 17 firms and shared a proposal he crafted that could be adopted by the companies to prevent future excessive payouts during a future financial crises.

The firms whose conduct was reviewed by Feinberg included: Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Citigroup Inc., American Express Co., American International Group Inc., Bank of America Corp., Boston Private Financial Holdings Inc., Capital One Financial Corp., CIT Group Inc., M&T Bank Corp., Regions Financial Corp., Sun Trust Banks Inc., Bank of New York Mellon Corp., Morgan Stanley, PNC Financial Services Group Inc., U.S. Bancorp and Wells Fargo & Co.  

Source:

Feinberg: Unfair to Ask Firms to Return Payouts (The Wall Street Journal)

Archives