Pay cuts coming for executives at companies that took bail-out cash

WASHINGTON — The top earners at five big companies still living on federal bailout money will take a 15 percent pay cut this year, the Obama administration's pay czar says — yet many will still make millions.

Kenneth Feinberg also said cash salaries would be capped at $500,000 this year for the vast majority of the top executives at the five companies. Any further compensation has to be in stock. Still, he said, 69 of the 119 executives covered by the restrictions will take home pay packages worth more than $1 million.

The announcements Tuesday were the administration's latest effort to deal with outrage over lucrative pay provided to executives of bailed-out companies while the public struggles with stagnant wages and high unemployment.

Taxpayers still can expect to lose tens of billions on the rescues of the five companies: American International Group, GMAC Financial Services, Chrysler Financial, Chrysler and General Motors.

Feinberg said his review refuted companies' complaints that pay restrictions would drive away top talent. Inside the five companies, 84 percent of the top executives covered by last year's pay limits have stayed put, he said. "These statistics undercut the argument that if you don't pay more, people will leave," Feinberg said. "They are not leaving."

Feinberg set pay rules in October for the seven companies that received the most money from the government's $700 billion bailout fund. Since then, Citigroup and Bank of America have paid back the money and are no longer covered by the pay guidelines.

It's far from clear that the five remaining companies will repay their taxpayer billions.

AIG, the world's largest insurer before it nearly collapsed in the financial crisis, has been selling assets to repay some of its $182 billion bailout package. This month, it sold American Life Insurance Co. for $15.5 billion.

That deal is expected to cut AIG's outstanding debt to the government to about $78 billion. The company is considering other sales. And the government will sell shares it holds in AIG to recoup some of its investment.

It remains doubtful that taxpayers will recover their entire investment in AIG, though. Last fall the Government Accountability Office said AIG's stability depends on market conditions and continued government aid.

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