AIG, Bank of America, Citigroup, GM Have Executive Pay Cuts; Among Others Bailed Out
Posted on | October 22, 2009 | 2 Comments
Today we found out that seven major companies that got bailed out will have the compensation of their top earners cut. The seven companies affected are AIG, Bank of America, Citigroup, GM, Chrysler, GMAC and Chrysler Financial. Kenneth Feinberg was given the responsibility to rework the compensation rate for these companies for the remainder of 2009. The restructuring of the pay will reduce these salaries by more than 90%.
Feinberg is only allowed to adjust compensation for these companies that were bailed out. In addition to the actions by Feindberg, the Federal Reserve Bank issued guidelines for the banks it regulates. The new guidelines on compensation discourage the amount of risk taking that many of these executives took part in that led to the credit crisis. Currently the Fed oversees 5,000 bank holding companies and more than 800 state banks.
The cut in executive pay will apply mostly to November and December but these are the months that often determine year end bonuses. With this being the case we can expect to see a huge cute in the earnings of the top executives of these companies. Feinberg stated, “What I learned through this whole experience is there is entirely too much reliance on pay in cash.”
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Author: Jesse Wojdylo
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2 Responses to “AIG, Bank of America, Citigroup, GM Have Executive Pay Cuts; Among Others Bailed Out”
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October 22nd, 2009 @ 5:27 pm
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October 22nd, 2009 @ 7:00 pm
Finally we get a sniff of sweet justice. Hopefully that is a step in moving the CEO to employee pay ratio in the right direction.
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