Officials at Citigroup ( C), Morgan Stanley ( MS) and other financial institutions that received government aid may increase base salaries for some executives and other top-producing employees, the Wall Street Journal reports, as a way to sidestep new federal caps on compensation.

The crackdown by the U.S. government, part of the economic-stimulus package signed by President Obama in February, limits bonus pay for the top five executives of any company that got taxpayer capital through the Troubled Asset Relief Program, plus the 20 next-highest-compensated employees, the Journal reports.

The discussions at these companies are at an early stage, partly because the government hasn't yet issued specific rules on the bonus payments that will be allowed at companies that received TARP aid, according to the newspaper. The talks also are proceeding cautiously because of the outrage over American International Group's ( AIG) award of federal bailout funds as bonuses to executives.

Most traders and bankers on Wall Street get a base salary of anywhere from $200,000 for managing directors to $1.5 million for a chief executive, the Journal reports. But most of their pay comes in the form of a bonus.

"The trend is to increase the base pay in light of the reduced bonuses," the Journal quotes Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, as saying. "Without the revenue" that top performers provide, he adds, "these companies can't survive."

Under the forthcoming rules, bonuses could come to no more than one-third of the total annual compensation paid to employees covered by the restrictions, according to the Journal report.

Discussions about raising base pay levels are preliminary at Morgan Stanley, and the company hasn't fleshed out a formal strategy, the Journal reports, citing people familiar with the matter. Citigroup officials, meanwhile, have considered designating which 25 executives will be subject to bonus limits.