According to Treasury Department guidelines announced last week, General Motors Co. and GMAC's second-highest tier of executives are limited to salaries of $500,000 and are prohibited from receiving bonuses unrelated to performance.
Kenneth Feinberg, Treasury's special master for executive compensation, set these limits in order to let executives focus on long-term gains and financial stability rather than short-term growth.
Previously, Feinberg had set limits for the top 25 executives at GM, GMAC, Chrysler Group and Chrysler Financial.
The limits that are next to be imposed will apply to the next 75 highest-paid executives. In addition, at least 50 percent of each second-tier executive's total compensation must be held for at least three years.
In most cases, executives' cash salary will be limited to 45 percent of the total. The Treasury states that any cash incentives will be delivered over two years, eliminating large lump-sum cash bonuses.
The compensation committees of these four firms, under rules set by the government, identified about 12 executives who qualified as exceptions to the $500,000 limit.