Stephen Foley: Tsar uses power over pay

Click to follow

US Outlook: Whether you choose the formal Special Master for Compensation, or the shorthand "Pay Tsar", Ken Feinberg's title reeks of authoritarian power. The Washington lawyer, appointed to dictate remuneration at America's taxpayer-owned banks, car companies and insurers, is showing that he is determined to use it.

I have been struggling to get comfortable with Mr Feinberg's order to zero out the 2009 pay of Ken Lewis, the humiliated and soon-to-depart boss of Bank of America. Of course Mr Lewis wasn't going to put up a fight. The $1.5m salary is irrelevant to his already comfortable retirement, and he has suffered far too much public opprobrium already.

But what principles is Mr Feinberg operating on? He has promised to set them out publicly soon, but I am not optimistic they will be coherent, or even fair. I dislike their retroactive nature, and am nervous about ripping up contract law.

Perhaps the best way to see this is as an exercise in raw power. I'm a US taxpayer, so $1.5m less for Ken Lewis is $1.5m we might get back of the bailout funds. It is a model that shareholders might want to follow for future pay rounds: private-sector pay tsars to sit on remuneration committees and talk down the awards – before they are written into contracts.