The Obama administration's pay czar, Kenneth Feinberg, will demand that seven companies receiving "exceptional" amounts of taxpayer aid cut the annual salaries for their 25 top executives by an average of around 90 percent from 2008's levels, ABC News has confirmed through a person familiar with the situation.
Overall, the total compensation for these 25 executives, including yearly bonuses and retirement pay, will be cut by an average of around 50 percent, the source said.
Any of the 175 executives who want more than $25,000 in special perks -- such as private planes, limos, company cars or country club memberships -- will have to receive government permission first, the source confirmed.
The Treasury Department had no comment. The New York Times first reported the story earlier Wednesday.
Feinberg was appointed by the administration in June to oversee executive pay at seven companies receiving what the administration has deemed "exceptional assistance" from the government bailout -- AIG, Citigroup, Bank of America, General Motors, Chrysler, GMAC and Chrysler Financial.
Feinberg is expected to announce his plan in the coming days.
The seven companies today either declined comment entirely or said they were not willing to react to a plan that had not been publicly released.
AIG, which has received government approval for a record $180 billion in taxpayer aid, will reduce compensation for its top 25 executives to less than $200,000 total, the source said. Executives in the company's financial products unit -- which brought the insurance giant to its knees with risky deals-- will not receive any other compensation in the form of stocks or stock options, the source added.
Earlier this year, the insurance giant created a public uproar when it dished out $165 million in retention payments. In March 2010, the company was set to pay out another $198 million, which Feinberg asked them to scale back, according to a recent report by government watchdog Neil Barofsky.
The administration has been vocal in its displeasure with Wall Street pay, especially after bailout recipient Goldman Sachs said it was set to pay a record $23 billion in bonuses this year.
"The bonuses are offensive, and to the firms that still have federal TARP money, there's some jurisdiction: The pay master of Treasury is working on trying to limit that," David Axelrod, senior adviser to President Obama, said Sunday on "This Week with George Stephanopoulos." "You've seen a lot of firms go to stock rather than cash -- so at least people have a stake in the success of their company, and they're not just walking away with cash-making short-term decisions.
"They ought to think through what they are doing, and they ought to understand that a year ago a lot of these institutions were teetering on the brink and the United States government and taxpayers came to their defense," Axelrod said. "They have responsibilities and they ought to meet those responsibilities."
In a rebuke to the industry on Wall Street last month, Obama on Sept. 14 vowed, "We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses."
Feinberg has acknowledged that his work requires him to bridge the massive divide between Wall Street's and Main Street's views on executive pay.