The Treasury Department’s Paymaster Kenneth Feinberg is now taking aim at compensation packages for mid-level executives at several firms including Citigroup (NYSE: C), AIG (NYSE: AIG), General Motors (NYSE: GM), Chrysler, and GMAC (NYSE: NYSE:GMA) on the heels of limiting compensation for top-level executives.
According to the Treasury Department’s new guidelines, fewer than 10 of the 450 targeted employees at the six firms that are still under Feinberg’s watch, will be allowed to earn more than $500,000 per year, according to a source familiar with the matter
Back in October, Feinberg cut the pay for the 25 most highly compensated employees at firms that are still participating in the Troubled Asset Relief Program, leading to complaints that TARP companies were being put at a competitive disadvantage in terms of attracting in keeping top talent. Feinberg now plans on issuing rules for the remaining 75 of each company’s top 100 compensated employees.
It’s likely that employees in the 26-100 range at Chrysler and Chrysler Financial will be exempt from this latest round of compensation limitations because none of them have earned more than $500,000 annually.
The tough stance that Feinberg has taken on executive compensation is one of the many reasons why banks, including Citigroup and Bank of America, have been eager to repay the government and free themselves of being under Feinberg’s authority. Bank of America wired $45 billion to the government this week, completing its withdrawal from the TARP program. Citigroup is reported to be in negotiations with het government about how it may be allowed to exit from the TARP program as well.
