Pay Czar to Demand Sweeping Compensation Cuts at 7 Bailed Out Companies
Obama's executive pay czar has big cuts in mind for corporate honchos.
Oct. 21, 2009 — -- 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.
