Oct. 21 (Bloomberg) -- Executives at seven bailed-out companies including Citigroup Inc. and Bank of America Corp. will have their pay cut by an average of 50 percent after negotiations with Kenneth R. Feinberg, the U.S. special master on compensation, two people familiar with the matter said.

The cash portion of salaries for the 25 highest-paid employees will be slashed 90 percent, according to a person familiar with the plan who spoke anonymously because the details haven’t been announced. Some cash will be replaced by shares that employees will be restricted from selling immediately, the same person said. An announcement could come this week.

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Oct. 23 (Bloomberg) -- Obama administration pay cuts ordered at seven taxpayer-rescued companies leave 66 executives -- about half those reviewed -- with total long-term compensation of at least $1 million.

Multimillion-dollar packages were approved for 22 employees at GMAC Inc. and 18 at Citigroup Inc., according to reports yesterday from Kenneth Feinberg, the Treasury Department pay master who ordered cuts that shift pay to long-term stock awards. Feinberg’s report on New York-based Citigroup, Bank of America Corp. and five other companies getting multiple bailouts didn’t identify employees or disclose previous compensation.

The figures show that Wall Street, even after compensation was slashed by half in some cases, remains lucrative for top executives. The average American worker earned about $50,000 last year, according to the U.S. Census Bureau.

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The highest approved pay is $10.5 million for Robert Benmosche, chief executive officer of New York-based American International Group Inc., the insurer whose bailout totals $182 billion. That includes a cash salary, a so-called stock salary and long-term restricted stock. Four other AIG executives will get packages exceeding $1 million. Benmosche’s pay was previously approved.

Cash v. Stock

“There is entirely too much reliance on cash and there’s got to be a better way to tie corporate performance to long-term growth,” Feinberg said yesterday in Washington. “I’m hoping that the methodology we developed to determine compensation for these individuals might be voluntarily adopted elsewhere.”

Feinberg focused on reducing cash pay in favor of stock that can be sold beginning in 2011. For example, the three highest-paid executives at New York-based Citigroup will receive $475,000 each in salary and $9 million in total long-term pay.

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Ealier today [10/21/2009] it emerged that Royal Bank of Scotland, bailed out with £20bn of taxpayers' money a year ago, has already amassed a pay bill, including salaries and bonuses, of almost £2bn for its 20,000 investment bankers – a pot that could double by the year's end.

A newspaper report said that RBS has hired dozens of City high-flyers on bumper no-strings-attached bonus deals, in defiance of its promises to rein in profligate pay. The Daily Telegraph claims that 11 bankers were poached from ailing Wall Street bank Merrill Lynch on estimated packages of £500,000 each.

The reports come just hours after a firebrand speech from the Governor of the Bank of England calling for banks to be brought to heel.

In his most outspoken attack yet on the banks, Mervyn King said it was no longer acceptable that UK lenders are allowed to engage in high-risk casino banking under the cover of a taxpayer guarantee.

A separation of investment banking arms from retail operations may be the only way out of the current 'unworldly' situation where taxpayers have to pick up the tab when institutions get into trouble, said King.

King's speech gave voice to mounting public anger over the 'back-to-business-as-usual' arrogance of banks that have benefited over the last year from £1.3 trillion in taxpayer support to rescue the financial system.

And the CEBR figures will fuel the flames, particularly as the banks stand accused of rationing loans to businesses and consumers, while handing out huge pay deals.

That RBS is at the heart of the bonus bonanza will be especially controversial, given that the Government holds a 70% stake in it. RBS declined to comment.

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