Treasury exec pay oversight faulted
Washington — A report released Wednesday said the U.S. Treasury approved “excessive pay” for the top executives at General Motors Co. and Ally Financial Inc. in 2013.
The special inspector general overseeing the $700 billion Troubled Asset Relief Program, or TARP, used to bail out automakers, banks and a major insurance company, said the Treasury “significantly loosened executive pay limits, resulting in excessive pay for Top 25 employees at GM and Ally while the companies were not repaying TARP in full and taxpayers were suffering billions of dollars in losses.”
The report said nine GM executives in 2013 collectively received $3 million in overall compensation increases to a total of $35.3 million — ranging from 4 to 20 percent hikes — at a time GM was under government pay oversight. Five executives at GM got pay raises for three straight years under government oversight.
The report said Treasury “rolled back its application of guidelines aimed at curbing excessive pay, whereby approving high pay driven by Ally and GM’s excessive pay proposals without independent analysis and under an ill-defined, pay-setting process that lacked objective criteria.”
The companies repeatedly argued they needed higher pay to retain executive talent and complained the restrictions made it hard to keep executives.
Initially, seven companies that received extraordinary assistance were required by Congress to get approval from Treasury for top executive pay including GM, Ally, American International Group, Bank of America Corp., Citigroup Inc., Chrysler Financial and Chrysler Group LLC. As companies repaid their bailouts, they exited. With the government’s sale of its final shares of GM in December, only Ally remains in the program.
The Treasury’s first “pay czar,” Ken Feinberg, said in an interview that initially the Treasury cut pay for executives at the seven firms by 50 percent and cash pay by 90 percent. He called the report “much ado about nothing.”
Feinberg said the program couldn’t be expected to “single-handedly change the dynamics” of pay on Wall Street and at automakers. The program was required by Congress as public outrage flared over executive pay was “largely a sideshow.”
Christy Romero, the special inspector general, said in an interview the Treasury’s focus swung too much on companies saying they need to retain critical executives, rather than holding the line of compensation: “Why remove limits on executive compensation that are a trade-off for the bailout when the companies are still being bailed out? To do that would send really wrong the message,” Romero said, saying it sends a message “that there is no tradeoff for continuing in the bailout.”
Patricia Geoghegan, the Treasury pay czar known as the special master, criticized the report.
“The SIGTARP’s report unfortunately contains many inaccuracies and omissions. The record shows that the Office of the Special Master has fulfilled its obligation to balance limiting executive compensation with allowing companies to repay taxpayer assistance,” she said.
Ally spokeswoman Gina Proia said the report is full of “misstatements.” She noted taxpayers have recovered $18 billion from its Ally investment after loaning the company $17.2 billion.
GM’s proxy statement noted its executives make less than comparable companies.
“While the U.S. Treasury owned GM stock and ever since, we have worked to align executive compensation with the long-term interests of stockholders and we will continue to do so,” GM spokesman Jim Cain said.