Aug. 12 (Bloomberg) -- Kenneth Feinberg’s mandate to set pay guidelines for top managers at seven companies bailed out by the U.S., including Bank of America Corp. Chief Executive Officer Kenneth Lewis, may set a template for Wall Street compensation.

“He’s really the administration’s spokesperson for what’s acceptable compensation,” said Mark Borges, a principal at Compensia Inc., a Corte Madera, California-based pay consultant. “Companies will have to pay attention to what he says.”

Feinberg, the Obama administration’s “special master” on executive pay, is due to receive compensation proposals by tomorrow from Citigroup Inc., American International Group Inc., Chrysler LLC, Chrysler Financial Corp., Bank of America, GMAC Inc. and General Motors Corp. The companies must tell him how they plan to pay the 25 top-earning employees. Feinberg will rule on the plans within 60 days after they’re completed.

Governments worldwide are examining the pay of bankers blamed for fueling the worst financial crisis since the Great Depression. The U.K.’s financial regulator today told British banks to comply with new rules to limit bonus payments. Swiss lawmakers today rejected a plan to limit pay at UBS AG after the bank posted a record loss.

“The president continues to believe, as he has long before he got here, compensation has to be based on -- not on reckless risk-taking, but on value that you’re providing and doing so in a way that doesn’t jeopardize your firm or taxpayers,” White House spokesman Robert Gibbs said today.

Cuomo Pay Report

The administration proposed pay measures in June, aiming to reduce incentives that led executives to take excessive risks, and to quell a political outcry over bonuses paid at AIG. Treasury Secretary Timothy Geithner has blamed pay standards tied to short-term profit for contributing to the crisis. New York Attorney General Andrew Cuomo said last month that nine banks getting U.S. aid paid $32.6 billion in bonuses last year.

House Speaker Nancy Pelosi and Financial Services Committee Chairman Barney Frank said the pay plans of the seven companies should “meet sound financial and policy goals.” Guaranteed bonuses violate the principles of taxpayer protections set by Congress, Pelosi and Frank said today in a letter to Geithner.

Feinberg’s work, along with a House bill on pay, “will become a road map for future executive compensation planning in the financial services sector and other industries,” they said in the letter.

Bonuses Seen Rising

Bonuses are already set to rise next year, according to New York-based pay consultant Johnson Associates Inc. The incentive compensation for employees in fixed-income divisions of banks may jump 40 percent to 50 percent from last year, the New York- based firm said. Bonuses at asset management firms may fall as much as 35 percent, the report showed.

The U.K. rules stop short of adopting mandatory provisions that would have deferred some awards. Instead, banks must comply with a Financial Services Authority code that tries to stop bankers from getting bonuses at high multiples of their salary, or bonuses guaranteed for more than a year, the regulator said today in London.

Feinberg, a 63-year-old Washington lawyer known for mediating disputes over compensation for damages from the Sept. 11 attacks, declined to comment on this week’s proposals. In an interview in June, shortly after being named to the unpaid post, he said he won’t “impose my will” on companies. “I will consult with them and work with them,” he said.

Phibro’s Hall

“We’re in active discussions with him much as we were with the Treasury before he was appointed,” GMAC Chief Financial Officer Robert Hull said in an Aug. 4 interview.

Citigroup’s Andrew Hall, who runs the bank’s Phibro LLC energy-trading business and has earned about $100 million in some recent years, may not be subject to Feinberg’s review, according to a person close to the bank. Hall may be exempt because his current employment contract was signed prior to the Feb. 11 cutoff date set in the Treasury’s June pay rules, the person said. Future contracts signed by Hall with Citigroup might be subject to the rules, the person said.

Treasury spokesman Andrew Williams didn’t return a call seeking comment.

In a second phase, Feinberg will decide on pay packages for the next 75 highest-paid employees at the companies. While the initial proposals won’t be released publicly, Feinberg’s findings will be made public in a way that doesn’t violate individual privacy rights, a person familiar with the matter said.

Goldman Sachs

Feinberg’s decisions will pressure other financial institutions to adopt similar pay practices even if they aren’t obligated to do so, Borges said. Goldman Sachs Group Inc. and Morgan Stanley are among banks that have repaid government funds, in part to avoid government pay limits. New York-based Goldman Sachs drew criticism from lawmakers last month when it set aside a record $11.4 billion for employee pay.

“If Feinberg comes out and says Bank A wanted to compensate its high-earning employees a certain way but he didn’t like it, it’s going to be awful tough for another company to use a similar program without investors saying there’s a problem with that,” he said.

Chrysler said in a statement that it will adhere to the requirements outlined in its $12 billion U.S. government bailout, including an executive compensation proposal. GM, the recipient of $65 billion in U.S. aid, said today that it has submitted its proposals. It doesn’t plan to make the submission public.

One of Feinberg’s most important tools is his authority to impose so-called clawback provisions, said Frank Glassner, CEO of San Francisco-based Veritas Executive Compensation Consultants LLC. Clawbacks set aside portions of employee bonuses that can be recouped “if the payment was based on materially inaccurate performance criteria,” according to the June pay measures.

To contact the reporter on this story: Ian Katz in Washington at ikatz2@bloomberg.net.

Last Updated: August 12, 2009 18:11 EDT