Executive Pay Crackdown

The pay czar has spoken. Kenneth Feinberg, the Treasury Department's special master for compensation, will slash compensation for the 25 highest-paid employees at the seven firms that got the biggest federal bailouts, “with the vast majority of salaries coming in under $500,000,” says the Wall Street Journal's front-page story. 175 employees—of Citigroup (C), Bank of America (BAC), the American International Group (AIG), General Motors (MTLQQ), Chrysler, and the financing arms of the two automakers—will see their compensation shrink by an average of 50 percent, says the article. Salaries will drop 90 percent on average. According to the article, “The largest single compensation package will be less than $10 million and is destined for a Bank of America Corp. employee, according to people familiar with the matter. That is much less than Wall Street's standard payouts for star employees.” The New York Times also makes the news its lead story, reporting that executives at the companies seeking more than $250,000 in “special perks”—like private planes or country club memberships—must first seek government permission.

Insider-trading allegations have pushed hedge fund Galleon Group to shut its doors, the Wall Street Journal reports. In a letter to employees and investors yesterday, co-founder Raj Rajaratnam said the firm will "conduct an orderly wind down" of its funds. According to people familiar with the matter, the informant who tipped off regulators to the suspicious activity at the firm is Roomy Khan, a hedge fund manager who worked for there for a short time in the late 1990s. According to the New York Times, Khan has “a history of financial trouble” and “agreed to cooperate with prosecutors after she was caught making trades using inside information.”

Google (GOOG) plans to announce its new music initiative at an event in Hollywood next week. According to the Times, “The service will give users a more efficient way to find, learn about and sample music after they search for information about bands, albums or songs, said a person who has seen an early demonstration.” Google won’t host any music, but the paper says it has “struck deals” with some streaming music services that will allow song sampling. Facebook is also planning to experiment with music in the near future too, most likely through its virtual gift store. The paper explains, “There will be two ways to buy songs: For 10 cents, or one Facebook credit, users can buy Web songs that can be played by the recipient online in perpetuity. Or they can pay full price, probably a dollar or 10 credits, then download the song and transfer it to a music player.”

The Washington Post reports that while the Obama administration is “winding down” aid to big banks and automakers, it’s now redirecting its attention to small business and the housing market. "There is still too little credit flowing to our small businesses,” the president said in a speech yesterday. Under the current plan, small companies can obtain low-interest loans through local banks with less than $1 billion in assets. Those institutions, in turn, will be allowed to borrow from the Troubled Assets Relief Program at a lower-than-usual 3 percent rate.

Two deals announced yesterday suggest that money-making could be in Twitter’s future, says the New York Times. The “back-to-back deals” make the messaging service’s stream of posts available to Microsoft (MSFT) and Google’s (GOOG)’s search engines. Microsoft says that at least “for now” it doesn’t plan to put ads on its Twitter search service. Google says ads may be coming “at a later date.” The paper notes that “Microsoft also said that it had reached a separate agreement to soon include status updates from Facebook in Bing, but it gave few details of what that service would look like.”

Finally, Stephen King's publisher knows how to build suspense. The company is withholding the e-book edition of King’s novel Under the Dome until the day before Christmas. It’s a strategic move that comes at a time of increasing tension between book publishers and retailers over how to price industry blockbusters like King's novels. The Journal reports, “Aiming to preserve the value of the hardcover edition, Scribner, an imprint of CBS Corp.'s (CBS) Simon & Schuster publishing arm, is delaying the electronic-book publication of the King thriller until Dec. 24, or six weeks after the $35 hardcover hits the bookstores on Nov. 10.”