The US government is preparing to order bailed-out banks and car companies to slash the cash salaries of their top executives by an average of 90% in an effort to quell outrage over multimillion-dollar boardroom excess.

Kenneth Feinberg, the US treasury’s so-called pay tsar charged with vetting remuneration, intends to tell seven struggling firms still dependant on taxpayer dollars that their 25 highest-paid executives must accept severe year-on-year cuts. The biggest drops will be in salaries. But after taking into account bonuses, stock options and other elements, total pay packages are set to fall by an average of about 50%.

Feinberg’s power only extends to companies that are yet to repay government aid. The firms concerned include the struggling banks Citigroup and Bank of America, plus the insurer AIG.

Also on the list are the Detroit car manufacturers General Motors and Chrysler, and the car companies’ financing arms, Chrysler Financial and GMAC.

A mediation specialist formerly responsible for settling compensation claims for victims of the September 11 terrorist attacks, Feinberg has spent the last two months scrutinising pay proposals submitted by bailed-out businesses. His findings, due to be formally released within the next week, were leaked to US media yesterday.

Several individuals have already acquiesced to Feinberg’s will. Bank of America’s soon to retire chief executive, Ken Lewis, last week announced that he will forgo his $1.5m (£900,000) salary this year, under pressure from Feinberg.

Other ordinances will require any “frills” worth more than $25,000, such as country club membership, limousines or private aircraft, to be subject to government approval. And Feinberg is likely to insist on a division between the roles of chairman and chief executive.

Source/Full Story: guardian.co.uk
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