This is a rush transcript from "Your World With Neil Cavuto," February 4, 2010. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: You might have heard once or twice there are some at the White House who dismiss us, that they don’t even listen to us.

Then there are those who are honest and rise above the petty fray to talk to us, and yet only us. I’m not talking the gardener. I’m talking the czar, the pay czar, who could have gone on any cable channel to talk business, but chose instead to talk to me on Fox Business.

And let’s just say, for those of you who get Fox Business, the pay czar did not disappoint, especially when taking on critics who say bankers still pulling down fat pay packages are pulling a fast one on him.

(BEGIN VIDEOTAPE)

CAVUTO: They rolled you.

Do you think they rolled you?

KENNETH FEINBERG, SPECIAL MASTER FOR EXECUTIVE COMPENSATION: Well, absolutely not. First of all, understand, these contracts that are being honored occurred years ago, before the TARP law was even implemented, not on our watch. These are valid, binding contracts. And what I’m trying to do — frankly, with the help of AIG — is get as much of that money back as we can and also make sure that the $45 million that this unit orally pledged to pay back the taxpayer is paid back.

CAVUTO: Well, how much of that...

FEINBERG: We’re up to $39 million

CAVUTO: How — it is $39 million?

FEINBERG: Thirty-nine million of the $49 million that was orally pledged last year has been repaid under this agreement.

CAVUTO: So there are disputes on that, sir, that it isn’t $39 million, that you’re overstating it.

What – you’re — it is, sir?

FEINBERG: $45 million was the total that was pledged.

CAVUTO: Right.

FEINBERG: Nineteen million was delivered about six months ago. Another $20 million is delivered as a result of this negotiation. There’s about $7 million to go. It will be collected.

CAVUTO: I know you talk about this idea that these were contracts written years ago and you didn’t want to break up, you know, contracts and all that. It’s — legally you can’t. It’s tough. And you’re a pretty good lawyer.

But, I mean, the firm wouldn’t even be in the position to make good on these contracts had taxpayers not intervened in the first place, right?

So — so doesn’t that, in a sense, be it at taxpayer default, make all these contracts null and void?

FEINBERG: Now you’re a lawyer. AIG’s lawyers tell me it’s valid. The employees tell me it’s valid. The Federal Reserve tells me it’s valid. The Office of Financial Stability tells me it’s valid.

CAVUTO: Does the president tell you it’s valid?

FEINBERG: I don’t speak to the president about this...

CAVUTO: Really?

FEINBERG: ... this case.

CAVUTO: This never came up in your conversations?

FEINBERG: Never, ever...

CAVUTO: When was the last time that you...

FEINBERG: ... have I talked to the White House.

CAVUTO: When was the last time you talked to them?

FEINBERG: I’ve never spoken to the president about this.

CAVUTO: Really?

FEINBERG: Never. Not anybody at the White House...

CAVUTO: OK.

FEINBERG: Anybody at the White House. So — so if these contracts – I’m trying to deal here with a problem to maximize the amount of money that can come back to the taxpayer. And far from being outmaneuvered, I would say that with all due respect to Senator Grassley, who I have great respect for, we are trying here to maximize getting these getting these dollars back, not paying out AIG financial products people.

CAVUTO: But did you look at not rewarding this or finding a way around rewarding this, because this money is going back to the very folks, as you know, sir, who got the company in the debacle it eventually landed in?

FEINBERG: Under the law that I am administering, I will do what I can in 2010 compensation, where I do have jurisdiction, to try and make sure that these retention payments are taken into account when I set prospective pay in 2010. But I’m not prepared to challenge valid contracts entered into years ago.

CAVUTO: So, Mr. Feinberg, people look at this and say, well, if this is a preview of coming — I don’t know, salary or contract arbitration attractions, the other side has you.

FEINBERG: People — I mean, look, I’m angry about this. The fact of the matter is — this is the end of the retention contract problem. These contracts were entered into in 2007...

CAVUTO: Right.

FEINBERG: ... before there even was a TARP law implemented. We’re trying to deal with the problem that we confront. I don’t see how that’s being outmaneuvered. I’ll get as much of this money back as we can get back.

CAVUTO: Do you ever have a figure in your mind what connotes excessive compensation or — or — is it a million dollars?

Is it two million dollars?

I know these are very simplistic figures, but that in the back of your mind, no matter how well someone is doing, that it’s obscene.

What is the level at what you think just anyone borders on obscene?

FEINBERG: Here’s what I’ve said publicly in my pay determinations. Nobody should receive more than a base cash salary of $500,000 maximum. Now, there may be exceptions in certain cases. But that is sort of the figure that is the benchmark.

Then, if you want to get additional compensation beyond that, that’s all right. It may be earned, but it will be earned in the form of stock, which you will receive as an executive in the top 25 of each of these companies and you can’t redeem that stock for two, three, four, five years. That way, your overall compensation is going to be tied to the future fortunes of the company you work for and your performance and its performance are joined at the hip. And that’s the way it should be.

CAVUTO: I see the half-million-dollar salary figure, Mr. Feinberg.

FEINBERG: Right.

CAVUTO: But now what we’re looking at is, you know, a lot of these guys take bonuses of tens of millions of dollars, whether they accept it in one year or it’s in stock or it’s accrued, what have you, it adds up, certainly over many years, potentially, to $100 million or more.

FEINBERG: Absolute...

CAVUTO: Is that...

FEINBERG: Absolutely not.

CAVUTO: ... does that stop?

Because that’s the case for a lot of these guys now.

FEINBERG: I don’t think that is the case. I don’t know, maybe you have facts that I’m not aware of.

CAVUTO: Well, no. No, we just had a commodity trader at Citigroup not too long ago who — who had a $100 million package that was — that was written off on, that was OK. Not by you, I’m just saying that — that that was OK. So — so...

FEINBERG: No.

CAVUTO: Go ahead.

FEINBERG: Please, the $100 million individual at Citigroup was never signed off by me. It was never signed off by Treasury. Citigroup, rather than present that individual to me, sold the entire unit, including that individual...

CAVUTO: But the bottom line...

FEINBERG: ... to another company.

CAVUTO: ... he’s getting it. See, this is what we come back to, sir, I mean whether these guys will have ways to — to go around you, to, as Senator Grassley said, to roll you?

FEINBERG: How?

I don’t understand. If they sell their company and they’re not under my jurisdiction, Mr. Cavuto, then they’re not subject to my jurisdiction. I can’t — I can’t be out there — under the law, I can’t be reviewing every compensation package.

I know of no AIG individual who has a 10-year retention contract, none. I know of no AIG individual who, if they’re in the top 25 for 2010, I assure you I will be looking at their total compensation package...

CAVUTO: And what would the...

FEINBERG: ... and it will be brought within limits.

CAVUTO: But, no, would there be a number that would just — you would immediately say whoa, whoa, whoa?

FEINBERG: I’ve got to look at the submissions and see what the number is that they’re proposing and why. I can’t prejudge this. I’ve just received the data for 2010.

But I’m confident that unlike these retention payments, which are not on my watch and which I’m trying...

CAVUTO: Understood.

FEINBERG: ... all right?

When it comes to prospective compensation in 2010, for the top 25 individuals at AIG, including some in the financial products division, that is on my watch...

CAVUTO: OK, so I just want to be clear...

FEINBERG: ... and we’ll set the compensation.

CAVUTO: ... and excuse my ignorance ahead of the fact, Mr. Feinberg. I just want to be clear, is it still under your purview, when they return all the TARP dough?

FEINBERG: No. The day AIG...

CAVUTO: Oh, so...

FEINBERG: If they...

CAVUTO: So...

FEINBERG: ... if AIG returns...

CAVUTO: But that in — but that’s my point. See, that incentivizes them, does it not, sir...

FEINBERG: It’s...

CAVUTO: ... to return the money fast so they don’t have you breathing down their you-know-what?

FEINBERG: It sure does. And that’s fine with me. If AIG or any company is able to repay every dime it borrowed from the American taxpayer via by exiting from my jurisdiction, that’s precisely the primary objective. I’ve said it before and I’ll say it again, that’s precisely what we’re trying to accomplish.

CAVUTO: But is any of your — and I know you’re not revealing these figures that you’re using in your head, but is it fair to say that anything 10 times that base salary level has got to be justified?

Is one 10 times that – let’s say $5 million, it’s got to be – you’ve really got to justify it?

FEINBERG: Look, they’ve got to justify any total compensation package. I’ll look at the data that they submit.

CAVUTO: Yes.

FEINBERG: I’ll compare it with the other data in the marketplace. And I’ll try and come up with a fair and reasonable and appropriate calculation.

CAVUTO: I know it’s not your area, Mr. Feinberg, but I’d be curious to get your view, because it’s widely respected, do you think taxing anyone’s bonus at 50 percent is excessive?

FEINBERG: You’re asking me?

I haven’t looked at that — at the — at the issue.

CAVUTO: No, no. You don’t have to.

FEINBERG: Yes.

CAVUTO: Just what do you think of that?

FEINBERG: I — I think, depending on the amount of the bonus, I have no problem with the idea that — that banking institutions that relied on the American taxpayer to get out from under the — the financial difficulty they were in owe it to give back to the American taxpayer a — a healthy part of their check, yes. I think it’s OK.

CAVUTO: And you don’t think this is the president’s way of sort of reengineering the work force away from finance – you’re just wasting your time, kids — and into other, more friendly fields?

FEINBERG: You’ll have to – you’ll have to ask the White House, the administration. I’ve got enough problems dealing with just seven companies, now five, without opining on the rest of the — of the menu of - - of initiatives that are out there.

CAVUTO: But do you — do you worry about where those initiatives could go?

FEINBERG: I worry about excessive pay. That’s what I’m worrying about these days.

CAVUTO: All right. Ken Feinberg, it’s been a real pleasure talking to you.

Thank you very much.

FEINBERG: Thank you very much.

(END VIDEOTAPE)

CAVUTO: All right, think about that, a top administration guy who went to FOX, FOX Business, more to the point, first, pretty much his own man. And that says something about Ken Feinberg, the pay czar, who, by the way, doesn’t like to be called czar, which was fine. We just called him Mr. Feinberg.


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