US ‘plans bail-out firm pay cut’
Wall Street sign
President Obama has made his displeasure at the bonuses clear

Firms in the US which received billions of dollars of government aid in the financial crisis are to be told to cut the pay of top executives, reports say.

The seven companies that received the most aid from the US Treasury will have to reduce the basic salaries of their 25 best-paid employees by up to 90%.

The totals paid to each firm’s 125 top earners would be halved under the plan.

There has been widespread outrage over the high level of bonuses paid by firms that had to appeal for government help.

The seven companies affected would be Bank of America, American International Group (AIG), Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial.

‘Offensive’

The US is expected to announce the salary cuts for top executives within the next few days.

Kenneth Feinberg, the Treasury official appointed to handle compensation issues as part of the $700bn Troubled Asset Relief Programme (Tarp), will be in charge of the negotiations on salaries with each of the companies.

Officials close to Mr Feinberg say the plan, targeting the 25 top earners at each of the seven companies affected, will on average cut total compensation by about 50%.