23 Oct 2009

US companies to be ordered to cut pay

6:01 am on 23 October 2009

Companies in the United States which received billions of dollars of federal aid in the financial crisis are to be told to cut the pay of their 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 company's 125 top earners would be halved under the plan.

The BBC reports the government is expected to announce the salary cuts within the next few days.

Details were confirmed ahead of schedule on The Early Show on CBS by Elizabeth Warren, who heads the $US700 billion Troubled Asset Relief Programme (TARP) oversight panel.

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

Some companies, such as the Goldman Sachs Group and JP Morgan Chase, have already repaid bailout money.

The BBC reports excessive pay and bonuses have been cited as one of the causes of the world economic downturn, with bankers accused of taking greater risks driven by potential rewards.

A recent G20 summit wanted bonuses linked to long-term performance.