Huge pay cuts for US bailout companies
US companies which received billions of dollars as part of bailout forced to cut pay to top executives
Thursday, 22, Oct 2009 10:18
By Richard James.
US companies which received billions of dollars in taxpayers' bailout money are to be forced to cut pay to top executives and slash bonuses.
The seven companies that received the most government aid have been instructed they will have to reduce the salaries of their 25 best-paid employees by up to 90 per cent.
There has been public outrage at some of the bonuses still paid by the firms saved by bailout money at the height of financial crisis.
Those affected by the salary clampdown include, Bank of America, American International Group (AIG), Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial.
US president Barack Obama has previously expressed his displeasure at the continual payment of bonuses as the remainder of the population continues to suffer from the crippling fallout of the credit crunch.
The new plans are expected to see an average remuneration reduction of 50 per cent for the seven firms.
The move has also been designed to align board members' self-interest with the health of their companies.
Kenneth Feinberg, the Treasury official placed in charge of setting compensation for bailed-out companies, which received a total of $700 billion through the Troubled Asset Relief Programme (Tarp), is reported to have also set out plans whereby executives will have to receive government permission before "accepting perks".
Country club memberships, private planes and company cars worth more than $25,000 are all suggested as items that will require Treasury clearance.
The official plans are set to be unveiled by the Obama administration in the coming days.
Public anger at the financial district reached fever pitch earlier this summer when the insurance giant AIG paid $165 million in bonuses to staff in its derivatives business.