Feds Expected to Demand Executive Pay Cuts

Apparently, the clamor of unhappy constituents is being heard by the Obama administration, which is expected to order companies that received federal aid to slash the pay of its highest paid executives.

The Treasury Department is reportedly going to announce in the coming days that it will target the yet-to-be named companies that received the most financial aid, reports the New York Times.  

But the Times reports that seven companies will be forced to cut the cash payouts to their 25 best-paid executives by an average of about 90% from last year. For many of the executives, said the Times, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.

Although not a part of the news report, there is question as to whether this directive, if issued, will apply to Robert Benmausch, American International Group Inc. CEO, sources close to INN report.  On October 5, Bloomberg reported that Robert Benmosche’s $10.5 million annual pay package was approved by Kenneth Feinberg, the Obama administration’s special compensation master.

Feinberg completed his review after New York-based AIG provided him with details of Benmosche’s previous compensation and pay comparisons with other leaders, according to a Treasury Department letter dated Oct. 2. Benmosche, named CEO of the bailed-out insurer in August, will get a $7 million salary and as much as $3.5 million in long-term incentives, said the report.