Kenneth Feinberg, the Obama administration's "pay tsar", has proposed a $500,000 salary cap for hundreds of employees at companies bailed out by the US taxpayers, but is expected to soften the new rules with exemptions for some key staff.
The stricter-than-expected headline restriction for the six companies still reliant on extraordinary government aid will apply to a second tier of their best-paid employees, after Mr Feinberg ruled in October about the pay levels of the top 25 executives. The new restrictions will apply to the next 75 employees down at AIG, the insurer, Citigroup, the banking giant, as well as at the carmakers General Motors and Chrysler and their finance arms.
Bank of America, the only other big bank to have needed two injections of taxpayer cash, paid the government back on Wednesday, meaning it will no longer be part of Mr Feinberg's review.
An announcement could come today or early next week, depending on the results of behind-the-scenes tussles over how many employees should be exempted from the $500,000 salary cap. The Wall Street Journal reported yesterday that the firms involved have asked for a total of 12 individuals to be exempted, after Mr Feinberg said he would allow higher pay if managers could show "good cause".
Mr Feinberg, an attorney, whose official title is Special Master for Compensation, has been wrestling with how to restructure pay at bailed-out companies to take into account public anger, the possibility that the compensation structures can lead to excessive risk-taking, and the need for the firms to hire and retain talented employees if they are to recover.
Wall Street is most keenly awaiting his ruling on matters at AIG, which was nationalised during last year's financial panic and where executives have waged an occasionally belligerent campaign against his strictures.
Five of the insurer's senior staff, led by Anastasia Kelly, general counsel, threatened last week to quit if their pay was cut for 2010. Two rescinded those threats, but it has been reported that Ms Kelly may still leave before the end of the year.Reuse content