The Obama administration is set to ask that executive compensation be dramatically lowered at seven companies which received the most government help. While the plan hasn't been made public yet, it's expected that pay will fall an average of 50% for the top 25 paid executives at Citigroup, Bank of America, American International Group, General Motors, Chrysler, GMAC and Chrysler Financial.
The NY Times reports, "The cash portion of the executives’ salaries will be slashed on average by 90 percent, and the rest will be replaced by stock that cannot be sold for years. But while the plan would pare compensation substantially from what the highest-paid people at the companies might have received under normal circumstances, it would still permit multimillion-dollar pay packages," and the Wall Street Journal says the "vast majority of salaries [will come] in under $500,000." An executive at one of the seven firms also told the WSJ that the rumored plan was "clearly much worse than what had been anticipated."
The toughest restrictions will be at AIG: In the financial products unit, which is blamed for much of the firm's problems, employees will not receive more than $200,000 in compensation. A compensation consultant tells Bloomberg News, "The government is acting like the owner they are, and they’re a pretty ticked-off owner. The fear is, will this make people throw up their hands and say, ‘I have to leave’?"