Executives and top-level employees at seven companies receiving bailout payments—including Citigroup Inc. and General Motors Co.—must take 50 percent pay cuts, according to reports citing U.S. Treasury Department officials.
Kenneth Feinberg, the Treasury’s special master on compensation (also called the “Pay Czar”), planned to announce that cash pay packages for the 25 highest-paid must be slashed by 50 percent on average, according to multiple media reports. In addition, cash salaries for top-level executives at the firms will be cut by up to 90 percent.
For some firms, the restrictions are even harsher. Bloomberg reported that executive salaries at American International Group's (AIG) Financial Products division—which was largely responsible for the insurer’s fall last year—cannot exceed $200,000.
The plan will be revealed this week by the White House and comes after several weeks of deliberation and review by Feinberg of compensation packages at companies receiving Troubled Asset Relief Program (TARP) money. The firms under jurisdiction of the TARP plan include Citigroup, AIG, General Motors, Bank of America Corp., Chrysler Group LLC, GMAC Inc., and Chrysler Financial.
The people familiar with the matter also said that all benefits and perks greater than $25,000, such as private jets, must be approved by Feinberg’s office.
Feinberg was appointed to his position last year following public outrage regarding AIG’s $165 million bonus payment to its employees, after receiving more than $100 billion in emergency federal funding. AIG still owes U.S. taxpayers more than $80 billion.
Last month, Bank of America CEO Kenneth Lewis stepped down from his post and opted to not accept any salary or bonus for 2009.
A spokesperson at the Treasury Department declined to comment on the reports.