NEW YORK (Bloomberg) — Executives at seven bailed-out companies including Citigroup Inc. and Bank of America Corp. will have their pay cut about 50 percent after negotiations with Kenneth Feinberg, the Treasury Department's special master on compensation, two people familiar with the matter said.

Cash salaries for the 25 highest-paid employees will be slashed 90 percent under Feinberg's plan, which will be announced this week, one of the people said yesterday on condition of anonymity. Employees at the derivatives unit of American International Group Inc., blamed for insurer's near-collapse last year, can receive no more than $200,000 in total pay, one of the people said.

Feinberg, 63, who was special master of the September 11th Victim Compensation Fund, was named to the Obama administration pay position in June. Executive compensation came under scrutiny after companies got billions of dollars in federal aid last year amid the worst financial crisis since the Great Depression.

Public outrage flared in March after New York-based AIG paid $165 million in bonuses to employees of the derivatives unit.

All perks such as limousine service and private aircraft valued at more than $25,000 must be approved by Feinberg, one of the people said.

Feinberg's report will urge AIG executives who pledged to return their bonuses to honour that commitment, one of the people familiar with the matter said yesterday.

Bank of America chief executive officer Kenneth Lewis, at Feinberg's urging, agreed last week to give up his 2009 salary and bonus. Citigroup on October 9 agreed to sell its Phibro LLC energy-trading unit to avoid a potential showdown with Feinberg over a $100 million pay package for Andrew Hall, the unit's CEO.

Feinberg, in a speech yesterday in Washington, said he is "working daily" with the companies to reach agreement on their pay packages. "The result speaks for itself," he said when asked about negotiations with New York-based Citigroup over Hall's pay.

In addition to pay compensation at AIG, Citigroup and Bank of America, Feinberg oversees executive pay at Chrysler Group LLC, Chrysler Financial Corp., General Motors Co. and GMAC Inc.