Compensation Czar Says Pay Cuts Ordered for Good of Companies, Taxpayers

The move to impose steep pay cuts on bailed-out companies is for their own good, the White House compensation "czar" who made the sweeping decision told Fox News on Thursday, rejecting the claim that the administration is punishing Wall Street for bad behavior.

"Vindictiveness, punitiveness is not part of this program at all," Kenneth Feinberg said.

Feinberg spoke after rolling out a slew of restrictions on the seven firms that received "exceptional assistance" from the federal government's $700 billion bailout package. The new rules would require salaries to be slashed by 90 percent over last year for the 25 highest-paid executives at the firms.

But Feinberg said the rationale behind the program is to make sure the companies can repay the taxpayers.

"The primary objective of this whole program is to get these companies on their feet so they can repay the American taxpayer," he said. "One way to do that is by providing compensation that will ... maximize the likelihood that that objective will be achieved."

Feinberg said that by requiring compensation to take the form of long-term stock, "that is tied to future performance of the company, so the value of the stock will depend on how well that company does in the marketplace."

Feinberg earlier told reporters that the seven companies still owe taxpayers "hundreds of billions of dollars" and it is his "primary obligation" to see taxpayers are repaid.

Feinberg said he wants his compensation system to influence behavior across Wall Street.

"I am extraordinarily sympathetic to public concern about compensation packages," Feinberg said. He said he rejected all seven companies' original compensation proposals for their highest paid 25 employees, branding them excessively generous. He called the subsequent negotiations over lowering them "very intense."

The administration has drawn charges from legal experts that it is overstepping constitutional bounds by retroactively changing the terms of the bailout money and fiddling with contracts.

But few expect the firms to object, given the substantial public pressure the administration can exert.

The seven affected companies under Feinberg's plan are American International Group, Citigroup, Bank of America Corp., General Motors, GMAC, Chrysler and Chrysler Financial.

Feinberg, who made the decision without having to seek presidential approval, said Thursday he also rejects being labeled a czar.

"Czar sounds as if I'm issuing imperial edicts that have to be followed without question. I think overall it was a very healthy degree of cooperation. And I'm grateful to these seven companies for working closely with me on a voluntary basis," he said.

Fox News' Major Garrett contributed to this report.