US President Barack Obama's administration is to order cash salary cuts of up to 90% for top executives at firms that received significant government aid.
Seven companies that received the most government assistance at the height of the US financial crisis will each be required to cut the salaries of their 25 best-paid executives.
The biggest cuts will be to the cash portions of the 175 employees' salaries, which will be slashed by an average of 90%, and will mostly fall below $500,000, the Wall Street Journal reported.
The salary restrictions come after domestic and international outrage over the huge bonuses being paid to employees of companies that received billions in government assistance and were widely blamed for helping to spark the financial crisis with irresponsible trading and business practices.
In the wake of widespread anger over the salaries being paid to employees of bailed out insurance giant American Insurance Group (AIG), Mr Obama has appointed Kenneth Weinberg his ‘salary czar’ to tackle the issue.
For many of the 175 executives, the cash they would have received will be replaced by stock that will be restricted from immediate sale.
It has been reported that total compensation for the top earners, including stock and bonuses, will drop on average by about 50% under the plan to be announced in the next few days by the US Treasury Department.
The Wall Street Journal said Mr Weinberg would also demand a series of ‘corporate-governance’ changes at the firms.
Some of the toughest pay restrictions will come at the financial-products unit of AIG, blamed for the insurance giant's near-collapse at the height of the.
No employee within that unit will receive compensation of more than $200,000.
