October 22, 2009
Executives Of Bailed Out Firms To Get Massive Pay Cut
Executives at firms that received government bailouts last year will see a salary cut of an average of 90 percent this year.
Pay Czar Kenneth Feinberg of the US Treasury is expected to announce the pay cuts this week.The cuts will involve the 25 highest paid executives at seven companies that got huge bailouts from the government.
Those companies are Bank of America, American International Group, Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial.
Those seven companies accounted for $240 billion, or more than half of the TARP money dispersed so far.
At AIG, no executive will be paid more than $200,000 in total compensation, according to the Associated Press, citing a person familiar with the matter.
AIG received a bailout package totaling more than $180 billion.
Additionally, the Obama administration is expected to inform AIG that it must reduce the $198 million in bonuses promised to employees in its financial services division.
Under the guidelines, any executive seeking to gain more than $25,000 in special benefits will have to earn permission from the government. These perks include corporate jets and country club memberships.
However, executives can still receive payment in the form of company stock, but they will be forced to wait two years before cashing in on their value, and even at that point they will only be able to redeem one third of the stock. They will have an option to redeem another third of the stock after three years and the remainder after four years.
Feinberg has until October 31 to announce his new plan for pay restrictions on the top 25 executives of the seven companies.
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