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TIMELINE-US action on pay comes after a year of bail outs

Published 10/22/2009, 05:10 PM
Updated 10/22/2009, 05:12 PM
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(For a special report on the Federal Reserve's clampdown on executive compensation in the financial industry double click on [ID:nnN22439318])

Oct 22 (Reuters) - The U.S. Federal Reserve and White House pay czar Kenneth Feinberg unveiled a double whammy of guidelines to reduce excessive bonuses and pay at bailed-out banks and automakers on Thursday.

The following are key events in the controversy over executive pay since the financial crisis began in late 2007.

Oct 14, 2008 - President George W. Bush's Treasury Secretary Henry Paulson says the government will inject $250 billion into U.S. banks, taking equity stakes in an initial nine banks, including Bank of America Corp , Citigroup , JPMorgan Chase & Co and Goldman Sachs .

Jan 29, 2009 - U.S. President Barack Obama says multi-million dollar bonuses at bailed out banks are "outrageous," after the New York State comptroller Thomas DiNapoli reports that Wall Street employees' bonus pool in 2008 was $18.4 billion.

March 15 - American International Group , bailed out by taxpayers for a total of up to $180 billion, agrees to revamp its bonus system and cut remaining 2009 salaries for top executives at the financial products unit whose risky actions brought the insurer close to collapse. However, AIG says it is legally obligated to pay already contracted bonuses.

June 10 - The Obama administration names Kenneth Feinberg, the lawyer who oversaw the government's compensation fund for victims of the Sept. 11, 2001, attacks, as its pay czar to police compensation of top earners at companies receiving "exceptional" government aid, including banks and auto firms.

July 14 - Goldman Sachs says it set aside $11.3 billion for compensation in the first half of 2009, just months after getting a $10-billion taxpayer bailout, which it has since paid back.

Aug 16 - White House pay czar Feinberg says he has broad and "binding" authority over executive pay at bailed out companies.

Sept 25 - The Group of 20 leaders at a summit in Pittsburgh calls for crackdowns on banker bonuses, including a ban on multi-year bonus guarantees, clawing back of pay where performance has slumped, paying more bonuses in shares, and limiting bonuses as a percentage of revenues when banks have low capital.

Oct 22 - Pay czar Kenneth Feinberg slashes overall pay by more than half for top earners at seven companies that received massive taxpayer bailouts, and orders that most of their salaries be paid in the form of long-term company stock.

The Fed issues bank pay guidelines to curb excessive risk-taking. The guidelines apply to any employee able to take risks that could significantly and adversely affect the safety of a firm. The Fed will conduct a review of the practices of the 28 largest and most complex banking organizations. (Writing by Steve Eder and Claudia Parsons)

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