The Treasury Department is expected in the next few days to order companies that received huge government bailouts last year to slash the base salaries of their top executives by an average of 90 percent and cut their total compensation in half, a person familiar with the matter said.
The cuts apply to the 25 highest paid executives at the seven companies that received the most assistance, the person said on Wednesday, speaking on condition of anonymity because the decision has not been announced.
Smaller companies and those that have repaid the bailout money, including Goldman Sachs Group Inc and JPMorgan Chase & Co, are not affected.
Kenneth Feinberg, the special master at Treasury appointed to handle compensation issues as part of the government’s US$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.
It was unclear exactly how much the executives would be allowed to make, or how that would be determined. Each case is being handled individually and no details were available on how the calculations were being made.
Tom Wilkinson, a GM spokesman, said on Wednesday that 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.”
Chrysler Group issued a similar statement. Representatives for Chrysler Financial, Bank of America, Citigroup and AIG declined to comment.
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