WASHINGTON -- Top executives at General Motors and Ally Financial received excessive compensation after receiving bailout funds from the U.S. Treasury in 2009, according to a Treasury special inspector general report released today.
The Treasury set limits on executive pay at GM and Ally as a condition for their receiving the bailout funds from the department’s Troubled Asset Relief Program during the 2008-09 financial crisis. The report, from a special inspector general assigned to look into executive pay at companies that received TARP funds, found that the Treasury rolled back those pay limits in later years, even as it continued to hold billions of dollars worth of stock in the companies.
“Treasury loosened its own pay restrictions for senior executives at General Motors and Ally Financial year after year, even as taxpayer losses in these companies mounted,” Special Inspector General Christy Romero said in a statement. “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.”
The report follows two previous findings by the inspector general’s office -- in January 2012 and January 2013 -- that officials overseeing the executive-pay program for the Treasury failed to rein in executive pay and were too deferential to the companies’ requests.
“By loosening restrictions on pay at these TARP companies, despite [the inspector general’s] repeated recommendations not to do so, Treasury could be sending the message that much-needed reforms coming out of the financial crisis are no longer necessary or required in exchange for TARP dollars,” Romero said in the statement.
The report urged more transparency from the Treasury on its criteria for evaluating compensation requests.
In a written response to a draft of the report, Patricia Geoghegan, the acting special master overseeing the TARP executive compensation program for the Treasury, disputed the inspector general’s findings, saying that the pay levels they set were in line with other similar companies and that the evaluation process is well-documented.
“While we believe our existing procedures are rigorous,” she wrote, “we will continue to consider whether changes are appropriate.”