A Treasury special inspector general report released today indicates that top executives from General Motors and Ally Financial received excessive compensation following the automaker’s bailout by the U.S. Treasury in 2009, according to Automotive News.
The treasury was supposed to cap executive pay at GM and Ally as a condition following their bailout through the government’s Trouble Asset Relief Porgram in 2009. However the new report found that the Treasury slowly reduced those pay limits in later years, even while the U.S. Government still possessed significant amounts of GM shares.
“By 2013 and 2014, Treasury rewarded top 25 executives at both GM and Ally Financial with excessive pay of at least $1 million, average pay of $3 million, pay raises and higher cash salaries with no recognition that these companies were not repaying TARP, leaving Treasury to sell the stock in the market, incurring taxpayer losses of billions of dollars,” Special Inspector General Christy Romero said.
The report asked the Treasury to be more transparent on its criteria for compensation, while the Treasury disputed the findings in the report. Patricia Geoghegan, who is overseeing the TARP program for the Treasury, said the compensation amounts GM had in place were the same or similar to what other companies received.
“While we believe our existing procedures are rigorous,” Geoghegan wrote in a written response to the report. “we will continue to consider whether changes are appropriate.”
GM said it was grateful for the taxpayer assistance, but disputed claims that its executives were overcompensated.
“We remain grateful for the assistance we received from taxpayers. 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,” the automaker said in a statement.
Earlier this year GM put new executive compensation criteria in place which will pay its top-ranking employees based on the company’s performance rather than a set amount. Factors such as global market share and invested capital will determine how much compensation executives earn. GM says this will maintain clarity between company performance and individual rewards, better link individual business performance to stock holders’ interests, support good corporate governance objectives and compensation practices, mitigate business risk and enhance their ability to attract, retain and reward talent.