DEFINITION of Pay Czar
Pay Czar was the nickname given to "Special Master for Compensation" Kenneth Feinberg. The role of the Special Master for Compensation was to monitor compensation paid to executives of firms that received funds under the U.S. Troubled Asset Relief Program (TARP) which bailed out several companies during the 2008-2009 financial crisis. Without the government paying taxpayer money to these companies that became insolvent during the crisis, many would have had to close. The government was afraid of the economic effects if large firms closed their doors and deemed these companies "too big to fail." Since the companies had gotten into trouble and were now receiving taxpayer money, a Pay Czar was appointed to ensure the compensation paid to executives of these companies was not outlandish, as it had historically been. The term "pay czar" was applied to Feinberg following his appointment by the U.S. Treasury Department to monitor these compensation awards to executives of these firms.
BREAKING DOWN Pay Czar
Following the disbursal of TARP funds to some of the country's largest financial institutions and businesses, many in the media and general public grew angry over the exorbitant bonuses being given to the executives of these bailed-out institutions. Subsequently, the position of Special Master for Compensation was created to regulate such awards.