Total compensation for these executives, including bonuses and retirement contributions will result in approximately a 50% overall drop in executive pay this year.
The businesses to be affected will include Bank of America, Citigroup, AIG, General Motors, Chrysler, and the financing arms of the two automakers.
At AIG, the recipient of the most bail out funding, top executives pay will be capped at $200,000 this year. Additionally, executives in the financial products division of AIG will receive no other compensation, such as stocks or stock options.
At all seven of the companies listed above, any executive seeking more than $25,000 in special perks, such as country club memberships, private planes, limousines or company issued cars, will have to apply to the government for permission.
The administration will also warn A.I.G. that it must significantly reduce the $198 million in bonuses promised to employees in the financial products division. AIG had already committed to this reduction in the past, and is offering no resistance to this announcement.
Feinberg has been in discussions with all of these businesses since he was appointed regarding their excessive pay and bonuses. In response to discussions Ken Lewis, CEO of Bank Of America has already agreed to accept no compensation or bonuses for 2009, though he will still be entitled to his $53 million in retirement benefits.
Citigroup, fearful of a political backlash over the pay of Andrew J. Hall, their successful energy trader who received nearly $100 million last year, agreed two weeks ago to sell its Phibro unit that Mr. Hall heads to Occidental Petroleum. Citigroup no longer has to deal with the bonus numbers for that portion of their business model.
It's reckoning time for the big Wall Street businesses that have been announcing record setting earnings and bonus payouts, while the rest of the economy struggles to recover from the worst recession since the Great Depression.
Written by Shelby Bateson