SAN FRANCISCO ( TheStreet) -- An official's criticism of Wells Fargo compensation practices on Thursday casts the federal government as more of a loan shark than a lender of last resort. The opprobrium came from Kenneth Feinberg, who has been assigned the task of reviewing pay practices at bailed-out companies by President Obama. Feinberg, who Obama has referred to as the administration's "pay czar," told CNBC he believes the $21.3 million that Wells CEO Stumpf received last year was too high. Feinberg also said that while he only has jurisdiction over General Motors, GMAC>, Chrysler, Chrysler Financial and American International Group ( AIG) -- not firms like Wells, which paid back TARP funds last year -- that all U.S. companies should adopt his model of small cash salaries, with stock incentives that can be cashed in over a lengthy period of time. "Even though Wells Fargo is not on my watch and I have no jurisdiction over Wells Fargo, it's certainly the size of that compensation raises serious questions," said Feinberg. "...These companies should voluntarily look at what I'm mandating for these five companies and adopt voluntarily the prescriptions that they think would be useful in their own peculiar situation." Feinberg insisted that he didn't believe the United States ought to be doling out compensation prescriptions to private, independent companies. But he failed to acknowledge that appearing on CNBC to criticize Wells Fargo could be considered inappropriate. Whether one agrees with Stumpf's sizable pay package or not, there's little doubt that the government is applying pressure by publicly lambasting the company and its CEO. Wells Fargo was a begrudging participant in the TARP program, and executives appeared to have difficulty biting their tongues when asked about the virtues of government plans to repair the financial sector. Once TARP funds were pushed down its throat, the bank refused for several months to dilute shareholders by raising capital to repay them. Eventually, Wells was once again strong-armed by the government, into raising $12.25 billion to repay its $25 billion worth of TARP funds in December, according to Warren Buffett, whose Berkshire Hathaway ( BRK.A) is a major holder of Wells Fargo shares.
Yet regardless of whether the government has any direct influence over once-bailed-out banks, the banks' own efforts to restructure their pay systems, and the haircuts any executive takes in a given year, Wall Street pay is still a sensitive issue. There are ceaseless headlines about JPMorgan Chase ( JPM) CEO Jamie Dimon's $16.7 million pay vs. Goldman Sachs ( GS) CEO Lloyd Blankfein's $9 million pay, and the $80 million "windfall" hidden beneath Citigroup ( C) CEO Vikram Pandit's supposed $1 compensation. Bank of America's ( BAC) top capital markets executive earned more than its CEO last year, and a top Citi trader earned more than Blankfein. The comparisons and analyses are endless, because average Americans remain disgusted, especially those without any pay at all. Yet for all the pay czar's ramblings and Obama's tough statements on "fat cat bankers," executive pay reform is remarkably absent from the latest proposal to overhaul the financial regulatory system. If Washington's so angry, and is representing voters' concerns, why talk on cable news networks instead of getting something done? It's fair to say that Stumpf is getting paid a lot of money, and that at least one of his perks was pretty bone-headed. The man will take home a $5.6 million base salary, $13.1 million in stock awards, and earned a $2.6 million addition to his pension plan. He also received $73,000 in perks, including an interest-free mortgage, despite harsh criticism of Wells' mortgage workout program. His entire pay package is more than twice the $8.9 million he received for 2008, and may make him the top-earning executive in the United States. Importantly, though, Wells Fargo isn't doling out pay without considering the folks it does have to answer to. Shareholders will receive a "say on pay" vote during their annual meeting next month. Also importantly, the bank earned $8 billion last year, and would have earned $12.3 billion, if not for TARP and the cost of paying it down. The previous year, during the height of the financial crisis, Wells earned $2.4 billion, or $2.7 billion sans TARP. And while its stock has lost some ground over the past couple of years, it has remained far more resilient and durable than most big-bank competitors.
Last year, in their first "say on pay" advisory vote -- which occurred directly after the market's lows -- Wells Fargo shareholders approved the board's decisions, and are perhaps the only constituency that deserves to give such approval, now that the bank doesn't owe taxpayers any money and repaid its borrowings, with interest and dividends. "Our stockholders have always been able to communicate with the board on matters of interest to them," said Steve Sanger, chair of the board's human resources committee and retired chairman and CEO of General Mills. "This year's advisory vote gives them an additional opportunity for participation in the company's compensation process." -- Written by Lauren Tara LaCapra in New York.