Rep. Barney Frank has introduced a bailout program overhaul bill that could affect executive compensation arrangements at companies seeking government help.

Frank, D-Mass., chairman of the House Financial Services Committee, wants the companies to eliminate any bonuses or incentives for the 25 most highly compensated employees, toss out any compensation plan that would encourage the manipulation of earnings, and divest private aircraft or private aircraft leases.

Business groups have criticized a provision that would apply the executive comp and aircraft restrictions to companies already participating in federal rescue programs.

“If they don’t like it, then they can give the money back,” Frank said at a briefing for reporters.

Frank introduced his bill 2 days after American International Group Inc., New York, announced plans to change its approach to terminating 14 executive comp plans.

AIG originally had announced that it would simply shut down the plans and pay all of the cash in the plans to the agents, rank-and-file employees, and executives who had participated.

Some valued agents and employees had been leaving AIG in an effort to cash out their plans, AIG said.

AIG now says it will exclude former agents and employee from the account value payouts, and that it also will exclude current top executives.

The new AIG executive comp plan approach was discussed earlier this week by Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Committee’s Capital Markets Subcommittee, and Rep. Joseph Crowley, D-N.Y., a member of the House Ways and Means Committee.

Kanjorski and Crowley had sought changes in the original AIG approach, and they had criticized the lack of government oversight over AIG compensation practices at a time when the government has been keeping AIG afloat.

AIG found that $3 million of the executive comp plans assets would have gone to 17 top AIG executives who are subject to limits on compensation included in the original economic rescue package, which was enacted Oct. 3.

An AIG representative says the company agreed at the request of Kanjorski and Crowley to revise its payout plan so that it does not apply to the top 17 executives. The move resulted in the deferral of about $93 million in executive comp plan payouts.

AIG says a group of executives also has agreed to forego immediate efforts to take out an additional $3 million in deferred compensation plan value.

The other executive comp plan funds have been paid.

The account value still in the plans must, by law, be paid to the employees, unless AIG filed for bankruptcy, according to AIG spokesman Peter Tulupman.

If AIG filed for bankruptcy, the employees would become general creditors of the bankruptcy estate, Tulupman said.

Kanjorski says the case provides an example of how a minimum review of AIG can result in a better use of taxpayer money.

“While I commend AIG for cooperating with our inquiry, I still have many questions about the developments that led to a federal rescue of AIG, and the Federal Reserve’s and the Treasury’s ongoing oversight, or lack thereof, of that intervention,” Kanjorski says.