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| Kenneth Feinberg, the U.S. Treasury Department's special master for compensation, center, speaks to reporters after participating in a panel discussion at the National Association of Corporate Directors' Corporate Governance Conference in Washington, DC, on Oct. 20, 2009. | ||
The seven companies that received the most assistance will have to cut the annual salaries of their 25 highest-paid executive by an average of about 90 percent from last year, said the person, who spoke on condition of anonymity because it has not been announced.
This person said Wednesday that the Treasury Department will announce the deep pay cuts within the next few days.
Kenneth Feinberg, the special master at Treasury appointed by Obama to handle compensation issues at the seven firms getting exceptional assistance from the government's $700 billion financial bailout package, is making the pay decisions.
The seven companies are: Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.
Total compensation for the top executives at the seven firms will decline, on average, by about 50 percent, according to the person familiar with the administration's decision.
At the financial products division of AIG, the giant insurance company which has received taxpayer assistance valued at more than $180 billion, no top executive will receive more than $200,000 in total compensation, the person familiar with Feinberg's plan said. The administration also will warn AIG that it must fulfill a commitment to significantly reduce the $198 million in bonuses promised to employees in its financial services division, the arm of the company whose risky trades caused its downfall.
The pay restrictions for all seven companies will require any executive seeking more than $25,000 in special benefits — things such as country club memberships, private planes and company cars — to get permission for those perks from the government.
Tom Wilkinson, a GM spokesman, said the auto company was "currently in discussions with Mr. Feinberg's office regarding executive compensation. We will have further information once those discussions have concluded."
Gina Proia, a spokeswoman for GMAC, said the finance company has "been working on a proposal that aims at embodying the principles set forth for compensation along with balancing the need to retain critical talent necessary to execute our turnaround. Until we receive notification about that plan, we have no further comment."
A spokeswoman for Chrysler Financial declined comment. A Chrysler spokeswoman did not immediately comment.
Feinberg's decisions on pay come after administration officials voiced sharp criticism in recent days of the plans of Wall Street firms to pay huge bonuses at a time when the country is still coping with rising unemployment and the effects of the recession.
Obama senior adviser David Axelrod called the bonuses "offensive" on Sunday.
"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 in an appearance on ABC's "This Week."
In recent days, top Obama administration officials have chided Wall Street firms planning to distribute big bonuses as their bottom lines rebound, noting that many of the firms continue to benefit from taxpayer assistance even as millions of Americans remain unemployed. Senior presidential adviser David Axelrod, for example, has called such planned payments offensive.
In a recent speech, President Obama himself accused large financial firms and their army of lobbyists of "mobilizing against change," adding: "They're doing what they always do -- descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently a whole bunch of those same American consumers bailed them out as a consequence of the bad decisions that they made."
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