Despite taxpayer outrage this year over bonuses provided to AIG executives, pay czar Kenneth Feinberg announced that he would allow an exception to his compensation rules in order to keep one executive from leaving the insurance giant. The unnamed executive's compensation package includes $3.26 million in stock options and an additional $1 million incentive.

The massive financial reform bill approved by the House includes "say on pay" provisions allowing shareholders an advisory vote on executive compensation packages, requires transparency for executive incentive packages and gives federal regulators oversight of compensation practices.

After having set compensation limits in October for top executives at seven firms receiving bailout money, pay czar Kenneth Feinberg set a $500,000 cap for mid-level execs at four of those firms -- Citigroup, AIG, General Motors and GMAC.

The three other firms included in the original ruling were exempt this time -- Bank of America because it has now repaid its bailout money, and Chrysler and Chrysler Financial because their mid-level execs are all paid less than $500,000.

Pay czar Kenneth Feinberg announced that seven companies receiving bailout money would be subject to strict new compensation rules. AIG, Bank of America, Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial will be required to cut executive pay an average of 90 percent from 2008 levels.

Feinberg told ABC News that he hoped companies not subject to the new rules would impose similar policies on their own.

"I'm hoping that, using these seven companies as a template or as a model, that other companies will voluntarily see the wisdom of the way we've structured compensation -- less cash, more long-term stock tied to the financial future of these seven companies," Feinberg said. "Hopefully others will see the wisdom of this and follow suit voluntarily."

By a vote of 237-185, the House passed (subscription) "say on pay" legislation allowing shareholders to vote annually on executive compensation packages and providing greater independence to compensation committees. The bill satisfies recommendations handed down by the White House in June, but goes further than the administration proposal by allowing regulators to restrict compensation packages.

Treasury Secretary Timothy Geithner announced new rules governing executive compensation for companies receiving funds from the Troubled Asset Relief Program and named Kenneth Feinberg as "Special Master" to oversee enforcement.

Geithner laid out five principles guiding the administration's policy: that executive pay should be performance-based, that it should reflect long-term risk as well as short-term profit, that it should not incentivize risk, that it should not include retirement packages or "golden parachutes" in conflict with company interests and that it should be fully transparent and subject to shareholder scrutiny.

The administration proposed two new bills: one establishing greater independence for compensation committees, and another ensuring shareholders a "say on pay" for executive packages.

Amid a growing media firestorm, President Obama ordered the Treasury Department to "pursue every single legal avenue to block" $165 million in executive bonuses paid by insurance giant AIG, even as Treasury officials acknowledged that the most of the payments had already been made and that the administration had known about them months ahead of time.

The White House claimed that Treasury could make AIG compensate the government for the bonuses by writing new requirements into a $30 billion aid package scheduled to go to the company -- which has already received a $170 billion government bailout -- but that the recipients of the bonuses would probably be able to keep them.