Obama pay czar says open to competitive pay offers

By David Lawder

WASHINGTON (Reuters) - The Obama administration's pay czar said on Thursday he is concerned that pay cuts he ordered at bailed out companies could hamper their ability to retain talent and would consider offers to hire new executives at competitive industry rates.

Kenneth Feinberg, the U.S. Treasury's special master for executive pay at the seven firms that have received taxpayer bailouts, defended his pay restrictions as striking an appropriate balance between reining in excessive pay and allowing companies to thrive and repay the government.

"I'm always concerned that the companies thrive and they keep the personnel they need to stay in business. That's a major concern," Feinberg said at a forum sponsored by Bloomberg. "I took that into account in 2009 and I'll look at that again in 2010."

Feinberg last month ordered an average 50 percent cut in pay and bonuses for the top 25 earners at the seven bailed-out firms: General Motors, Chrysler Group, GMAC Financial Services, Chrysler Financial, American International Group, Bank of America and Citigroup.

Feinberg said the automotive firms did not appeal his rulings, but said he would be open to requests to hire in new executives at competitive pay.

"If General Motors or any other company wants to bring someone in laterally -- laterally -- and competitive pay packages require that lateral hires get certain competitive pay, what have you, we're perfectly willing to examine that," he said.

Feinberg added that AIG's new chief executive, Robert Benmosche, had expressed concerns over the compensation restrictions, but said he was not aware of any situation that led to recent media reports that Benmosche was considering stepping down.

Benmosche on Wednesday sent a letter to employees saying he that was "totally committed" to staying at the company, which is 80 percent owned by U.S. taxpayers. Benmosche said he and the company's board were "frustrated" with pay restrictions that he said present a "barrier that stands in the way of restoring AIG's value."