BulletProofBlog the blog on crisis communications

Last month, the Obama Administration’s “pay czar,” Kenneth Feinberg, announced that top executives at companies that have yet to repay the financial assistance they received under the Troubled Assets Relief Program (TARP) will be paid cash salaries of $500,000 or less in 2010. The move, which was expected for some time, reflected Mr. Feinberg’s belief that, among other things, the excessive risk taking that many blame for the recent financial crisis can be best reined in by more closely tying pay to long-term performance.

Appearing on Charlie Rose on March 18, Mr. Feinberg outlined his approach to setting executive compensation at companies that received TARP assistance by saying that relatively modest cash salaries of $500,000 or less should be supplemented by “salarized” stock that cannot be redeemed “until years go by.” In so doing, Mr. Feinberg provided a very clear road map for companies who must confront investor ire over compensation issues.

One company that seems to have been paying attention, according to Mr. Feinberg himself, is Goldman Sachs. In the same Charlie Rose interview mentioned above, Mr. Feinberg noted that, “[Lloyd] Blankfein called me up and said, ‘Even though I am not subject to your jurisdiction, I’d really like to hear what you think about our compensation structure.’”  When Mr. Rose asked if he suggested a cap on Mr. Blankfein’s salary, Mr. Feinberg said, “I said he should take that into account…and he did, in fairness to Mr. Blankfein.”

While that’s short of a ringing endorsement, the fact that the most powerful figure in the executive compensation debate cited Goldman Sachs for not only seeking his guidance, but following it, is certainly a giant leap forward for a company so concerned about the impact of negative media coverage that it cited “adverse publicity” as a significant “Risk Factor” in its 2010 annual report.

At a time when Goldman’s compensation policies are under attack from a litany of detractors, the federal pay czar served, for a moment, as a helpful spokesman for the firm. Simply put, you can’t buy that kind of third-party validation – even if you’re Goldman Sachs.

Michael W. Robinson is a Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the world’s top crisis firm. He is also a contributing author to Bulletproof Blog™. Connect with Levick on Twitter: @Levick.