The Obama administration's pay czar plans to announce on Friday his next wave of rulings as bailout recipients struggle to get out from under his thumb.

Kenneth Feinberg has said these rulings will likely reduce pay for the 26th to 100th highest-paid employees at the six firms still under his authority.

Those firms, all of which received exceptional assistance from the taxpayers, are: Citigroup Inc , American International Group , General Motors Co , Chrysler, Chrysler Financial and GMAC.

Feinberg, a Washington lawyer appointed by Obama, slashed the pay of the top 25 employees at the companies under his jurisdiction in October, feeding concern that it would be difficult for the companies to retain or recruit talent.

The debate over what constitutes appropriate pay at financial firms was renewed this week as the United Kingdom slapped a 50 percent tax on bank bonuses and Goldman Sachs said its top executives will not receive cash bonuses for 2009.

Feinberg's next rulings will involve setting the compensation structure for the 26 through 100 highest-paid employees, but Feinberg told the Reuters Global Finance Summit last month the cutoff line is frequently blurred and that his rulings could affect many additional employees.

Douglas Elliott, a former JPMorgan investment banker now with the Brookings Institution, said the stakes are not as high for this next wave of rulings, compared with the top 25 earners.

But he said there is still potential for the six firms to lose a lot of key employees if Feinberg's latest rulings are perceived as too harsh.

Any time there's a pay freeze or something makes it less attractive to work there, it is usually the best people that leave because they are the most mobile, Elliott said.

Feinberg's control has caused significant friction with insurer AIG, where top executives, including CEO Robert Benmosche, have reportedly considered quitting because of the pay constraints.

The chief executive of Korn/Ferry International , the world's largest executive search firm, said this week that Wall Street may see an exodus to overseas rivals that have no limits on pay.

Gary Burnison said being a TARP firm involves uncertainty about government restrictions and could scare away potential employees.

For its part, Bank of America Corp will not have to worry about Feinberg's rulings.

The bank, which openly griped about Feinberg's first wave of rulings, on Wednesday finished its repayment of $45 billion it received from the U.S. Treasury's Troubled Asset Relief Program (TARP), making it the first company to come out from under Feinberg's authority.

Feinberg told Reuters it was very satisfying to see Bank of America, the largest U.S. bank by assets, come out of TARP.

Citigroup, the last remaining bank under Feinberg's immediate purview, is racing to exit the program and is in active negotiations with the government to repay billions in taxpayer bailouts.

However, it is not likely that Citigroup, the No. 3 U.S. bank, will be free of Feinberg's scrutiny anytime soon, as regulators believe the company must first pay back all of its bailout.

The bank has received $45 billion in TARP funds as well as insurance from the FDIC on $300 billion of assets. The multiple rescues have left the United States with a stake of roughly 34 percent in the bank.

Feinberg's forthcoming rulings will apply only to the final month of 2009, but will set the stage as the baseline for 2010, he has said. The rulings could also sharply scale back 2009 bonuses, which will likely be determined in January after the banks and other TARP recipients report fourth-quarter earnings.

In his first wave, Feinberg cut overall compensation by 50 percent and cash pay by 90 percent at those firms. Feinberg said the rulings are designed to reward long-term performance and clamp down on guaranteed cash, while still being sufficiently attractive to keep talent as the companies seek to repay the government.

(Reporting by Steve Eder and Karey Wutkowski; additional reporting by Nick Zieminski, editing by Matthew Lewis)

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