President Obama’s pay czar will cut compensation for the 25 highest-paid employees at seven companies that took large amounts of government aid. The 175 executives will face salary reductions of 90%, but with other compensation elements added in, the total reductions average 50%. Ken Feinberg also will require the seven bailed-out firms to change the way they do business in an effort to discourage excessive short-term risk-taking.
The financial-products division at AIG will suffer some of the toughest restrictions, the Wall Street Journal reports—no employee of the unit will make more than $200,000. In addition to AIG, the other firms affected are Bank of America, Citigroup, GM, GMAC, Chrysler, and Chrysler Financial.