US’ pay-cut plan fails to go down well with Wall Street

WASHINGTON: The Obama administration���s moves to rein in executive pay sparked criticism on Wall Street, as lenders such as Bank of America said the measures may hurt the very companies the US is intent on saving.

���People want to work here but they want to be paid fairly,��� said Scott Silvestri, a spokesman for Bank of America, the recipient of $45 billion of bailout funds. Rivals are ���identifying our top performers and using pay concerns to recruit them away for fair-market compensation,��� he said.

Kenneth Feinberg, the treasury department���s special master on compensation, said on Thursday he had slashed total pay at firms including Bank of America, Citigroup and American International Group by as much as 50%. The federal reserve, moving in tandem, announced guidelines aimed at making bank compensation more tied to risk management.

Together, the measures are meant to address what the Obama administration calls unchecked risk-taking fueled by excessive pay. The credit-market meltdown that followed led to a financial crisis that caused more than $1.6 trillion in losses and writedowns worldwide and 7.2 million US job cuts.

Bailed-out companies brought Thursday���s crackdown on themselves, said Stuart Grant, an investor lawyer and managing director of Grant & Eisenhofer in Wilmington.

���What should have happened is the boards of directors at these companies should have been setting compensation in a way that was appropriate in size and incentive and in risk,��� Grant said. ���It���s horrible, but it was inevitable and it was their own damn fault.���

Even after the Feinberg-mandated pay cuts, 66 of the executives at these companies will have total long-term compensation of at least $1 million.