Feinberg's Leadership on Corporate Governance

Ken Feinberg understands the limits of what he can accomplish as the pay czar when it comes to mediating pay. He seems to be successfully intervening in the most troubled TARP companies by slashing pay up to 50% and some cash salaries even more. I like the idea that high earning executives should get a relatively small base salary as cash and get paid the rest in "salary stock"-- salary that gets paid out as stock that needs to be help for a long time. Feinberg here is creating a new pay model that should become best practice throughout the financial sector-- TARP company or not. Long term stock holding and retention requirements align managers with stockowners, and should help them focus on long term business success and strategic planning.

My hope for Feinberg is not his top- down (and required parenting of compensation committees) imposition of new pay models but his movement to shareowner empowerment by improving corporate governance structures at his TARP charges. One pay czar cannot police the market, or even a few bad actors, over the long haul. The people with the interest, obligation and motivation to fix pay problems are company owners. So Feinberg's most significant and far reaching actions are his proposed corporate governance reforms. He will be successful to the extent that he affects the balance of power so that compensation committee directors and boards are made accountable to owners. His proposed corporate governance changes-- independent board chairs, risk committees and annual elections are a good start. His leadership should pave the way for Congress to expand these requirements beyond TARP to all publicly listed companies. Senator Schumer's Shareholder Bill of Rights should gain momentum to be included in the Senate Banking Committee financial reform bill with Feinberg's action; we need to see similar corporate governance provisions in Congressman's Barney Frank's Financial Services Committee. ShareOwners take note and urge these other decision makers to follow Feinberg's lead.