WASHINGTON—The Obama administration reportedly will order American International Group Inc. and other bailed-out companies to slash the compensation of their highest-paid executives.
The New York Times and the Wall Street Journal, citing people familiar with the administration's plans, reported Wednesday that the move stems from the growing furor over executive pay at companies that have received federal bailouts.
Under the plan, which is expected to be announced in the next few days by the Treasury Department, the seven companies—including AIG—that received the most federal assistance will have to reduce the cash payouts to their 25 highest-paid executives by an average of about 90% from last year.
For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately, the paper reported. Total compensation for the executives, including bonuses, will drop on average by about 50%, according to the reports.
The reports also said executives at AIG's financial products unit will receive no more than $200,000 in total compensation, and no other compensation such as stocks or stock options. The administration also will warn AIG that it must fulfill a commitment it made to significantly reduce the $198 million in bonuses promised to employees in the unit, according to the reports.
An AIG spokesman had no comment.
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