The Treasury Department approved at least $1 million in pay last year for each of the top 25 senior executive officers at GM and Ally Financial Inc., even as taxpayers were seeing more than $11 billion in losses after the federal government sold the remaining stock it had acquired from the auto company during the 2009 financial bailout.
In addition to the millions for the top executives, Treasury approved more than $500,000 in pay for the top 47 senior employees at the companies, according to a report released Wednesday by Christy Romero, special inspector general for the Troubled Asset Relief Program.
The pay was approved despite President Obama’s promise in 2009 that “top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000.”
Ally, the former consumer finance arm of GM that formerly was called GMAC, is the last company still under the TARP program. The IG noted that the government had taken $1.8 billion in losses from selling some of its stock in the company in 2013.
The inspector general had reported similarly “excessive compensation” to executives in 2012 and 2013, prompting calls from congressional leaders to rein in the pay.
Little was done, according to Romero, who said that the Treasury’s Office of the Special Master for TARP Executive Compensation “continued awarding excessive pay raises and only put back a minimal amount of long-term restricted stock as part of pay packages and eliminated it altogether again in 2014 from pay packages.”
Patricia Geoghegan, the special master for the TARP program, responded that the report contained “inaccuracies and omissions” and asserted that her office has “fulfilled its obligation to balance limiting executive compensation with allowing companies to repay taxpayer assistance.”
A source at the Treasury Department said that the executive pay was approved by the administration while GM was still under TARP but said the total amounts were deceptive because it included stock options linked to the success of the company. “It was not cash,” the source said, arguing that such compensation was not subject to the $500,000 cap.
The source added that it was unfair to look at GM and Ally in isolation, noting that Treasury has reported getting back $25 billion more than was originally invested in the TARP program.
Romero anticipated that argument in the report, stating: “[The Office of the Special Master] cannot use repayment of the TARP investment to tout its success without taking responsibility for the lack of repayment by the company and TARP losses to taxpayers by companies under OSM’s jurisdiction.”
She also argued that the pay packages are not close to market rates. “On an individual basis, these pay packages exceeded market medians by amounts ranging from $17,700 to $2.7 million, for a total of $22.9 million,” she noted.
