The government whacked the compensation of top executives at General Motors Co., Chrysler LLC and their financial arms Thursday.

Kenneth Feinberg, an independent official named to make sure taxpayer money isn't feathering the nests of company bigwigs, also ordered deep cuts for insurance giant AIG and financial houses Bank of America and Citigroup.

In metro Detroit, the order was a sobering reminder of Washington's involvement in the car business.

Chrysler's top execs will lose nearly a fourth of their total compensation. One departing official -- believed to be Deputy Chief Executive Officer Jim Press -- will see his $2.6-million annual salary stopped now, because it exceeds what Feinberg believed was in the public interest.

At GM, a proposal to push cash salaries as high as $1.8 million was rejected. Top company executives face an overall pay cut of just under 25%. One official -- CEO Fritz Henderson, stands to make more than before.

That's an increase over his 2008 total salary of $1.7 million, but less than the $7.2-million compensation package he had in 2007.
 

Cuts have a silver lining for GM's chief, others

Feinberg was appointed to make sure senior executives at the seven companies receiving the most money under the Troubled Asset Relief Program, or TARP, didn't spend taxpayer money on excessive salaries.

For Detroit, it didn't end there, with auto finance companies also among the top TARP recipients: GMAC saw compensation cut more than 85% from last year's levels; at Chrysler Financial, it was by 56%.

"I am extremely sensitive to the public outrage about this," said Feinberg, who turned back a proposal from GM to set salaries where they were before across-the-board pay cuts and increase some to as much as $1.8 million. His orders also set compensation for insurance giant AIG and financial firms Bank of America and Citigroup.

The automakers and the finance companies have received more than $80 billion in TARP financing.

Renee Rashid-Merem, a GM spokeswoman, said in a statement that the company engaged in a "collaborative and constructive review" of its compensation packages with Feinberg's office. She said GM will weight more of its compensation in stocks that are "directly tied to the company's performance, consistent with GM's long-standing compensation philosophy."

Feinberg insisted upon such a philosophy with all the TARP recipients, trying to limit most executives' compensation to about $500,000 in cash and restrict the redemption of annual salary taken in stock to no earlier than the second anniversary of the company receiving its TARP award. Those stock amounts would then be redeemable over three years. The redemption period would be moved up a year if the company paid back its TARP funding.
 

GM's chief to make more

It was not all bad news for the executives: GM President and Chief Executive Officer Fritz Henderson saw his total compensation package increase to about $5.5 million under Feinberg's determination, a person familiar with the documents said. His cash salary would be decreased by 25%, to $950,000, with the rest in stock.

Henderson already had seen a pay cut this year, compared with 2008 when his salary was $1.7 million. In 2007, his total compensation package was $7.2 million.

Feinberg's authority to set compensation was limited to the five most-senior executives and the next 20 highest-paid executives at each company. The determinations apply immediately and will remain in place until early 2010 when they will be revisited.

Mixed news for Chrysler's execs

In his letter to Chrysler, Feinberg made mention of three executives leaving the company before Dec. 31. For two of those, he said, payment of their salaries through their last days should present no problem. But the third person -- believed to be Deputy CEO Jim Press -- had been receiving an annual cash salary of $2.6 million, which Feinberg concluded was not in the public interest. He said payment should stop immediately.

Chrysler declined to name the executive, and the reports released by Feinberg did not identify individuals.

He did say, however, that setting Chrysler CEO Sergio Marchionne's compensation was outside his purview because Marchionne, the head of Italy's Fiat, took no pay from Chrysler in 2009. In all, no Chrysler executive remaining with the company was set to make more than $500,000 in cash. Stock compensation and long-term bonuses also were greatly restricted.