The U.S. Treasury Department late Wednesday announced new limits on pay for certain executives at companies that have received aid from the government's $700 billion financial-rescue fund.

The rules, which largely implement restrictions Congress passed earlier this year, limit bonus payments in an effort to protect taxpayer investments and curtail the payment of "golden parachutes."

Specifically, the rules limit bonuses paid to senior executive officers and other highly paid employees of rescued firms to one-third of total compensation.

Additionally, the rules encourage firms to pay salaries in the form of stock that must be held for a long period of time.

"As long as there is an obligation back to the government, the rules stay in place," a senior Treasury Department official told reporters on a conference call Wednesday.

As widely reported, the administration also announced plans to appoint Kenneth Feinberg to serve as a new "special master" to review compensation at companies receiving significant assistance under the Troubled Asset Relief Program, or TARP.

Feinberg, who oversaw the government's efforts to compensate Sept. 11 victims, will be able to reject what are deemed to be excessive or inappropriate salaries at companies receiving exceptional government aid.

Those seven firms receiving "exceptional assistance" from the government include: American International Group Inc. (AIG), Citigroup Inc. (C), Bank of America Corp. (BAC), General Motors Corp. (GMGMQ)., GMAC LLC, Chrysler and Chrysler Financial.

Treasury's rule also calls on the board of directors of each TARP recipient to put in place policies on luxury or excessive expenditures.

Meanwhile, the Obama administration Wednesday also unveiled plans to work with Congress on legislation that would give shareholders more say on companies' pay practices, all part of a plan to get compensation practices to better mesh with the interests of shareholders and the long-term health of companies.

Seeking to also boost oversight and transparency of firms' pay practices, the administration also wants Congress to pass measures that would help make corporate compensation committees much more independent.

It's time for companies' compensation practices to stand more closely aligned with sound risk-management and long-term growth, Treasury Secretary Timothy Geithner told reporters after holding a meeting at Treasury with Securities and Exchange Commission Chairwoman Mary Schapiro, Federal Reserve Governor Dan Tarullo and several compensation experts.

"This financial crisis had many significant causes, but executive compensation practices were a contributing factor," Geithner said in a statement Wednesday. Federal officials have argued that compensation practices incentivized excessive risk-taking, which ended up hurting firms as well as shareholders and the broader economy leading up to the financial crisis.

To encourage improvements, Geithner said the administration will be working with Congress to pass so-called "say on pay" legislation. That legislation would give the SEC authority to require companies to give shareholders a non-binding vote on executive compensation packages. He added the administration will save for later an announcement on new compensation rules for firms that have received government bailout money.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255, maya.jackson-randall@dowjones.com