Obama Orders Salary Cuts
Posted on Oct 22, 2009
In a move to quell public outrage, President Obama has ordered the government’s “pay czar” to cut by 90 percent the multimillion-dollar salaries that executives of seven bank and auto companies are receiving, citing the fact that these firms are entirely dependent on U.S. taxpayer money for financial survival. —JCL
The US government is preparing to order bailed-out banks and car companies to slash the cash salaries of their top executives by an average of 90% in an effort to quell outrage over multimillion-dollar boardroom excess.
Kenneth Feinberg, the US treasury’s so-called pay tsar charged with vetting remuneration, intends to tell seven struggling firms still dependant on taxpayer dollars that their 25 highest-paid executives must accept severe year-on-year cuts. The biggest drops will be in salaries. But after taking into account bonuses, stock options and other elements, total pay packages are set to fall by an average of about 50%.
Feinberg’s power only extends to companies that are yet to repay government aid. The firms concerned include the struggling banks Citigroup and Bank of America, plus the insurer AIG.
Most of Wall Street’s “fat cats” will escape the compensation crackdown because they have repaid government aid.