by the Forward

New ‘Pay Czar’ Walks Familiar Path

The age-old Jewish antipathy toward the murderous, antisemitic monarchs of pre-communist Russia was never captured better than in the old joke, retold in “Fiddler on the Roof,” in which a rabbi asks if there is a special prayer for the czar. Yes, the rabbi replies: “May the Lord bless and keep the czar — far away from us.”

That bit of folk-wisdom might help explain why Kenneth Feinberg, appointed June 10 by President Obama to oversee executive pay at federally bailed-out companies, was so quick to insist that it “troubles” him to be “described as a compensation czar,” as the media promptly dubbed him. The name “czar,” he told ABC News on June 11, “makes it sound like I’m going to issue some imperial decree.” His goal, he said, is to “reach out” to companies to find common ground. That’s far from a czar, as the rabbi might say.

If Feinberg was imagining himself in the rabbi’s shoes, it wouldn’t be the first time. After rocketing to fame in 2001 as head of the Bush administration’s September 11th Victims Compensation Fund, he has said repeatedly in public appearances that listening to victims and families describe their grief — he met with all 5,000 claimants — forced him to act not just as a payment overseer, but also, as he wrote in his 2005 book “What Is Life Worth?” as “psychiatrist, family counselor, grief expert, rabbi and priest.”

That sort of talk often draws accusations of arrogance. Three years of jawboning grieving widows into accepting cash payouts that he alone determined — following congressional guidelines, but with considerable discretion — earned him heaps of resentment and many sleepless nights.

Though Feinberg, 63, declined to be interviewed for this article, a close friend and moral guide, Rabbi William Hamilton of Congregation Kehillath Israel in Brookline, Mass., said the real face of Feinberg was one not of arrogance, but of “profound humility.”

“The leadership he showed in the 9/11 victims’ fund,” Hamilton said, “is a remarkable story of growth and teshuvah,” or moral renewal. “Beginning from a place of feeling that he knew what he was doing, he came to a profound humility that allowed him to hear other people’s grief.”

Even before taking on the 9/11 fund, Feinberg was widely regarded by legal insiders as the leading expert in devising payouts for morally and emotionally fraught disputes. His résumé includes asbestos-liability suits, the Dalkon Shield and DES birth and pregnancy cases, and the Cincinnati Roman Catholic archdiocese’s clergy-abuse settlement. In such cases, lawyers line up to represent either individuals who say they’ve been victimized by big institutions or institutions that deny blame. Feinberg’s job begins after the sides settle on an overall compensation sum. Judges hire him as a “special master” to divide the money among the victims.

Over the years, too, Feinberg has taken on an increasing number of pro bono cases, often on issues close to his heart. In 2007 he devised the payment criteria for an $8 million fund for victims of the mass shooting at Virginia Tech. He helped develop compensation guidelines for Jewish settlers evicted from Gaza in 2005. Together with another mediator, he set the lawyers’ fees in the 2001 settlement of the German slave-labor restitution suit.

“Everybody trusts him because he’s a straight shooter,” said Judge Jack Weinstein of the U.S. District Court in Brooklyn, who appointed Feinberg special master in 1984 in the landmark Agent Orange class-action case that established his reputation.

Born in the gritty Boston suburb of Brockton, Mass., Feinberg studied law at New York University and then worked as a federal prosecutor in New York before moving to Washington as an aide to Senator Ted Kennedy. In 1984, Weinstein hired Feinberg, then 38, to devise a plan for allocating the $180 million Agent Orange settlement. The lawsuit pitted seven big chemical firms against 80,000 Vietnam veterans who claimed they had been injured by the herbicide used by the military to defoliate Vietnamese jungles. Breaking with precedent, Feinberg used what he called a “backward” approach, deciding how much money each victim should get and then devising eligibility criteria. The practice, though still controversial, is now widespread.

In his latest role as pay czar — oops, “special master for compensation” — Feinberg will oversee fewer payments than he’s used to. His job covers only about 100 executives at the seven biggest companies that received federal bailout money last year, including AIG, Bank of America Corp., General Motors Corp. and Chrysler. There’s talk of his job expanding to include executive pay at smaller bailed-out firms, and perhaps advancing a longer-term administration goal of regulating runaway CEO pay. It’s the chatter about that longer-term goal that most alarms critics.

Populist anger over executive pay has been growing for decades. Liberal scholars and journalists regularly publish studies that show CEO pay mushrooming while salaries on the shop floor stagnate. A 2007 Federal Reserve report found CEOs at the nation’s top 367 corporations earning on average 407 times more than the average salaried worker — $11 million vs. $27,000 per year. In 1960, estimates say, the ratio was less than 50-to-1. The 1990 ratio was about 100-to-1.

Conservatives argue that management has become far more complex in recent years, and that the market should be allowed to determine pay rates. Liberals counter that estimated CEO-to-worker pay ratios currently are about 10-to-1 in Japan and 20-to-1 in Britain, making the American case an anomaly.

Feinberg has said that he does not take a “Robin Hood approach” to resolving pay issues, as some of his 9/11 fund critics charged. He merely aims to resolve disputes by finding common ground. On the other hand, he’s also said repeatedly that his “Jewish and blue-collar upbringing gave me a better sensitivity toward the underdog,” as he put it in a 2005 interview with Hadassah magazine. That’s admirable, but it’s hardly neutral.

He may have tipped his ideological hand even further recently, in seconding an Obama administration argument for regulating executive pay. Administration officials say the current economic collapse was due partly to tax rules that encourage companies to tie executives’ compensation to short-term profits rather than long-term growth.

On June 11, the day after Treasury Secretary Timothy Geithner announced his appointment, Feinberg told the BBC that in recent years, “compensation was tied to excessive risk-taking that ultimately brought down these institutions.”

Whether that way of thinking sours Feinberg’s relations with corporate leaders and congressional Republicans depends partly on whether he remains a master or becomes a real czar.

However his role develops, it’s hard to imagine Feinberg trying to push grand policies down anyone’s throat, given his decades-long reliance on consensus. Besides instilling sympathy for the underdog, he told Hadassah magazine, his Jewish heritage taught him “try to put myself in other people’s shoes.”

“Rabbis teach that listening is a religious imperative,” Hamilton said. “Sh’ma — listen — appears dozens of times in the text.” Indeed, it’s the first word in the basic Jewish declaration of faith. “And listening seems to be the thing that Ken is extremely good at.”

Contact J.J. Goldberg at

This story "New ‘Pay Czar’ Walks Familiar Path" was written by J.J. Goldberg.


J.J. Goldberg

J.J. Goldberg

Jonathan Jeremy “J.J.” Goldberg is editor-at-large of the Forward, where he served as editor in chief for seven years (2000-2007).

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