New Report Eyes GM and Ally Executive Pay

A new report from the special inspector general for the Troubled Asset Relief Program (SIGTARP), released on Wednesday, claims that top employees at General Motors and Ally Financial Inc., received “excessive pay,” after the U.S. Treasury Department significantly loosened executive pay limits.

Ally, however, told Auto Finance News that the report was full of mischaracterizations, and that the company has since returned the funding it received from the Troubled Asset Relief Program (TARP), despite heavy restrictions on how it was allowed to operate.

“Ally is pleased to have been able to more than repay the American taxpayer due in large part to the dedication of its management team,” a representative from Ally said. “And despite the significant constraints imposed at Ally as a result of TARP.”

During the last financial crisis, executive compensation pay limits were set by Treasury for companies that were recipients of TARP. The new report from SIGTARP claims that “Treasury had failed to rein in excessive pay and failed to implement SIGTARP’s recommendations to develop robust criteria, policies, and procedures to ensure it could meet its own pay-setting guidelines.”

As of September 26, Ally had paid $18.05 billion into the general fund of the Treasury, for the reduction of public debt, after receiving $17.17 billion under TARP, according to Treasury’s Daily Tarp Update. GM, the other company mentioned in the SIGTARP report, has paid $39.01 billion towards the $49.5 billion it had received, according to the same update.

“The U.S. taxpayer has received $18 billion on the Ally investment thus far, which is approximately $875 million more than was originally invested in the company,” Ally said. “The taxpayer is expected to receive additional proceeds on the Ally investment as the U.S. Treasury exits its remaining 13.8% common equity stake.”

The SIGTARP report, though, cites several examples “delineating OSM’s rolling back of guidelines,” and claims Treasury approved at least $1 million in pay for every Top 25 employee in 2013 and increased compensation by 28% for GM and Ally Top 25 employees from 2009 to 2013. It also states that Treasury tripled the number of GM and Ally employees who received cash salaries exceeding $500,000 from 2009 to 2013 and allowed 89% of the Top 25 employees to be paid cash salaries of $450,000 or more in 2013.

The report states that “Year after year, Treasury has loosened executive pay limits, getting further and further away from the President’s announced pay reforms and pay limits used by Treasury in 2009, even as taxpayer losses mount.”

Originally requested by Representative Jim Jordan (R-Ohio), chairman of the U.S. House Committee on Oversight and Government Reform Subcommittee on Economic Growth, Job Creation, and Regulatory Affairs, SIGTARP studied the number and value of pay raises requested by Ally and GM and approved by Treasury, between 2009 and 2013.

Ally, however, maintains that the finance company operated within the guidelines set by the Treasury.

“Ally’s executive compensation meets the requirements for TARP companies,” Ally’s rep told AFN. “Additionally, in July, over 97% of Ally stockholders voted to support Ally’s executive compensation structure.”

General Motors did not respond to AFN’s request for comment by press time.