New York State Attorney General Andrew Cuomo is talking with Rep. Barney Frank and other lawmakers about a plan that would tie Wall Street pay to the long-term performance of the firms, a report says.

Frank (D., Mass.), chairman of the House Financial Services Committee, and other prominent Democrats appear to back such a plan, though no legislation has been introduced, the Wall Street Journal reports.

Compensation became a big issue late last year when the U.S. government was forced to step in to cover increasing losses on Wall Street. The federal stimulus package included caps for those earning top pay at firms receiving federal funds.

The attorney general's office is in the middle of an investigation into the timing of $3.6 billion in bonuses Merrill Lynch paid employees in December just weeks before it was sold to Bank of America ( BAC) and before Merrill announced a loss of more than $15 billion in the fourth quarter.

Cuomo is examining ways to stagger both cash and stock compensation payments over several years, the Journal reports, citing people familiar with the matter. Therefore, if a business built on short-term risk-taking blows up, firms will be able to claw back pay, the newspaper adds.

A person close to Cuomo said change is needed but the intent isn't to micromanage or interfere with the private sector, the Journal reports.