WASHINGTON -- The U.S. Treasury failed to rein in pay at
companies that received federal bailout funds, a watchdog said
Monday, in a report that highlights continued friction over the
government's oversight of executive pay at companies such as
General Motors Co. and Ally Financial Inc.
The Treasury in 2009 gained power to approve executive pay at
firms that received major federal assistance during the financial
crisis, following public outrage over big bonuses paid at American
International Group Inc. after its financial rescue. Both GM and
Ally Financial still are subject to the pay oversight. The Treasury
recently unloaded its remaining shares in AIG, so the company no
longer has to submit pay packages for government approval.
Christy Romero, special inspector general for the Troubled Asset
Relief Program, said the Treasury failed to look out for taxpayers
by relying "to a great extent on the companies' proposals and
justifications without conducting its own independent analysis."
Ms. Romero also said the Treasury hasn't put in place policies that
would ensure salaries are within guidelines designed to discourage
excessive risk-taking by companies receiving bailout aid.
The Treasury rejected the watchdog's criticism and declined to
institute policy changes on pay, a sign the report might not crimp
the future pay packages of GM and Ally Financial executives.
"The facts show that [the Office of the Special Master]
continues to fulfill its regulatory requirements," said Patricia
Geoghegan, who manages a special office at Treasury that handles
executive compensation. Ms. Geoghegan said the office has limited
excessive pay while also allowing the three companies to remain
competitive and repay government assistance.
GM will remain under federal oversight for another 12 to 15
months while Treasury sells off its stake. It isn't clear when the
government will dispose of its 74% holding in Ally Financial.
Ms. Romero said that in 2012, Treasury approved pay packages of
$3 million or more for just over half the 69 top executives at the
three firms receiving TARP funds. Sixteen executives received
Treasury-approved pay packages of $5 million or more.
Those 2012 compensation packages include up to $10.5 million in
cash and stock for AIG Chief Executive Robert Benmosche, about $9
million in cash and stock for GM CEO Dan Akerson and $9.5 million
in stock for Ally Financial CEO Michael Carpenter, according to
data released last year.
"General Motors is performing at its highest levels in years
with a string of 11 profitable quarters and soon will have one of
the industry's newest product lineups, while complying with all
TARP restrictions and special master's decisions," a GM spokesman
said.
Ally didn't immediately comment on the report.
An AIG spokesman said the insurer is committed to rigorously
reviewed, market-based compensation under which "all employees are
held directly accountable for clearly defined goals that reflect
our commitment to properly balancing growth, profit and risk."
Congress and the White House wanted to cap salaries at $500,000
for the seven companies that received the most aid during the
financial crisis. The inspector general's report looks at 2012,
when AIG, GM and Ally Financial were the last three companies in
the program.
--Leslie Scism and Jeff Bennett contributed to this article.
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