US Treasury failed to limit excessive pay at bailed-out companies

Article by Anita Panait, on January 30, 2013

The United States Treasury Department "failed to rein in excessive pay" at three bailed-out companies -- General Motors, Ally Financial Inc., and American International Group Inc., -- according to Christy Romero, Special Inspector General for the Troubled Asset Relief Program. In a report, SIGTARP noted that 16 of the 69 executives at the bailed-out companies had 2012 pay packages valued at least $5 million, adding that 68 of them had overall compensation of $1 million or more.

However, since most of the composition is via stock, just three executives had cash salaries of over $1 million, SIGTARP said. The watchdog remarked in its report that although it had issued warnings that the Treasury "lacked robust criteria, policies and procedures" to curb excessive pay, the department "made no meaningful reform to its processes."

SIGTARP noted that decisions of the US Treasury were "largely driven by the pay proposals" made by GM, Ally and AIG. SIGTARP discovered in 2012 that the Treasury again failed to restrain excessive pay. Patricia Geoghegan, the Treasury's acting special master for TARP executive compensation, however disagreed with the findings of SIGTARP.

In a Jan. 25, 2013 letter to Romero, Geoghegan said the Treasury has restricted excessive compensation and kept compensation at levels that allow GM, Ally and AIG to remain competitive and repay their bailout money. The Treasury special master's office has been scrutinizing and limiting compensations for top executives at seven bailed-out companies since 2009. Chrysler Group, Chrysler Financial Corp., AIG, Bank of America Corp., and Citigroup Inc., however, have left TARP and are no longer subject to the special master's rulings.

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