The U.S. pay czar will slash compensation for the 25 highest-paid employees at seven companies that got large sums of government aid and demand a host of corporate governance changes at those companies, according to people familiar with the matter.

Kenneth Feinberg, the Treasury Department's special master for compensation, will cut total compensation for 175 employees by an average of 50%, these people said. As expected, the biggest cuts will be in salaries, which will drop 90% on average.

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