Senior level executives at seven bailed-out companies including Citigroup (NYSE: C), Bank of America (NYSE: BAC), AIG (NYSE: AIG) and others will have their pay cut by about 50% after negotiations with the Treasury Department’s “pay czar”, Kenneth R. Feinberg.
Under Feinberg’s plan, cash salaries for the 25 highest-paid employees at each company will have their cash salaries slashed by 90%. Employees in the derivatives unit of American International Group (AIG) will have their salaries topped out at no more than $200,000 in total pay.
Feinberg was previously named the special master of the September 11th victim compensation fund, was named to the Obama administration’s “pay czar” post in June. Compensation of senior-level executives came under significant scrutiny by the public after companies got billions of dollars in federal aid last year during the worst financial crisis since the Great Depression. The public outcries came to a peak in March after AIG paid over $165 million in bonuses to employees of its derivatives unit.
Recently, outgoing Bank of America CEO, Kenneth Lewis, agreed to give up his 2009 salary and bonus at Feinberg’s urging. Citibank agreed to sell its Phibro LLC energy-trading unit to avoid a showdown with Feinberg over a $100 million compensation package to the units CEO, Andrew Hall.
In a speech given on Tuesday in Washington, Feinberg said that he is working daily with companies to reach an agreement on their pay packages.
