US pay czar Kenneth Feinberg has waded into the bankers' bonus debate with a range of sweeping cuts and demands for corporate governance reforms.

On the pay front the proposals are to cut the packages of the top 25 executives at the seven bailed out  firms: Bank of America, Citigroup, AIG, General Motors, GMAC, Chrysler Group and Chrysler Finance. The cash portion of their salaries will be cut by an average of 90% compared to 2008. Bonuses will have to be paid in the form of restricted stock which cannot be sold until the company repays the government. Perks of more than $25,000 - such as for country clubs or company cars - will need to be justified. Feinberg has estimated the group's total annualised pay would be 50 percent lower than a year before, although some commentators have suggested that this figure is overstated.

Some of the the proposed governance reforms may come as a surprise to US investors - namely the separation of Chair/CEO. European investors have struggled to make headway on this reform with their US issuers and even even US investors themselves have been lukewarm on the benefits of separating board oversight from executive management.

President Obama has praised Feinberg's approach, calling it an important step forward in curbing the influence of executive compensation on Wall Street, while still allowing those companies to succeed and prosper. Speaking to the US press President Obama said: "I've always believed that our system of free enterprise works best when it rewards hard work. This is America. We don't disparage wealth. We don't begrudge anybody for doing well. We believe in success. But it does offend our values when executives of big financial firms, firms that are struggling, pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat."

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