Treasury Freezes Compensation For Top AIG, Ally, GM Executives

While a majority of the American corporations that received “exceptional” bailout assistance form the Troubled Asset Relief Program, there are still three businesses — AIG, Ally Financial (you may know it by its pre-bust name of GMAC), and General Motors — remaining. Today, Treasury Dept. announced that the Acting Special Master for TARP Executive Compensation has determined that the top executives at this trio of companies will not get a pay raise in 2012.

While salaries will generally remain in the $500,000 or less area, around 83% of executive pay in 2012 will be in the form of company stock, thus how much these execs earn will ultimately be decided by how well their business performs.

The pay freeze impacts what is referred to as the “Top 25″ executives at each company — the five senior executives followed by the next 20 executives with the highest 2011 compensation — but because a total of six executives have left the relevant companies since the beginning of 2012, the freeze only affects 69 suits.

Writes the Treasury about the changes to executive pay:

Overall the cash compensation for these 69 individuals decreased 18 percent and their total direct compensation decreased 10 percent from 2011 levels. For the individuals in the “top 25″ in both 2011 and 2012, cash compensation increased 1 percent and total direct compensation decreased 2 percent. For the individuals new to the “top 25″ group for 2012, cash compensation decreased 47 percent as compared to the cash they received for 2011, and total direct compensation decreased 30 percent as compared to 2011.

In terms of how these three companies have progressed toward exiting TARP, the Treasury reports that AIG has reduced its obligations to the U.S. government by more than 75%, while GM is about halfway there. Ally has the farthest to go, having only given back about one-third of TARP funds.

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  1. Bsamm09 says:

    The gov’t has no business either dictating salaries or giving handouts to failing businesses. If they really want to limit their compensation, they should have let them fail. Then their pay would have gone down all the way to zero.

    • Carlos Spicy Weiner says:

      Keeping GM in business is in our National interest, and AIG going bust would have taken a LOT of other big players down and caused a lot more grief than AIG’s immediate collapse.

      • Bsamm09 says:

        I agree about AIG going down but still think they should have. Don’t see how GM is in our national interest though.

        • Carlos Spicy Weiner says:

          Huge industrial manufacturing infrastructure. If it had been possibly sold off it would have left a huge hole in our domestic capabilities.

          • Unclaoshi says:

            People like to throw the invisible hand of the free market around here a lot. Well here it was at work the actions of these companies caused them to fail. It really would be unfortunate to have all of those unemployed people but if a big business cant fail and just get bailouts then they dont really have to worry about their quality of their goods and services. The free market would dictate that they do a bad job so people leave and they go out of business unless something changes. Plus I have no sympathy that some executives arent getting raises when most Americans dont get a raise or their raise are not enought to keep up with inflation.

            • Talmonis says:

              The “invisible free hand” only harms the workers and consumers. Market actions do not harm the moneyed classes in any way. Either by a golden parachute to safety for a CEO/Executive, or just mass amounts of reserve funds/income (what millionaire is truly put out on the street by a loss of $50,000? Those same $50,000 will cause a worker to become homeless). The austrian “free-market” concept is the worst thing that could ever happen to the working classes around the world.

    • cbrillow says:

      “The gov’t has no business either dictating salaries or giving handouts to failing businesses.”

      Couldn’t agree more. And I’m relieved that I’m not yet seeing many replies cheerleading for the gov’t to limit their compensation, even though many believe these execs don’t merit the high pay they’re receiving.

      While the temptation may be strong to say “To hell with them, they don’t deserve anything”, remember: The gov’t that you allow to control somebody else’s pay can also control YOUR pay. Don’t think it will happen to you? Believe that at your peril.

      • Blueskylaw says:

        The thought that these executives are the only ones that could run the company is hubris at its best. There is always someone out there that can do the same job just as well for lower pay. If the government is the largest shareholder then that means it is an owner, and as an owner who is not involved in the “good ‘ole boys network” if the government feels that the pay is not deserved then the executives can either accept it or find another job like so many millions of normal Americans are having to do.

    • incident_man says:

      As long as these companies are partly publicly-owned (taxpayer funded), the taxpayers (AKA the US Government) has EVERY RIGHT to dictate their salaries. If they don’t like it, then they can pay off the goddamn taxpayer bailouts!

      • Admiral_John says:

        Is this any different than a board of directors of a publicly traded company voting not to award a bonus to a CEO?

        As long as we (the taxpayers) have a stake in these companies, why should we have a say in limiting their bonuses? If they don’t like it, they can pay back the bonuses.

    • Fineous K. Douchenstein says:

      I believe Bsamm09’s point was not that the government can’t dictate salaries to these businesses, but that they should have never put themselves in this position. Personally I can’t see why these businesses shouldn’t have been allowed to fail outright, because from the ashes would come new businesses.

  2. dush says:

    But GM, i thought you told us you paid all your loans.

    • Costner says:

      They did. They just failed to remind you that the government still owns a huge pile of their stock.

      • Snowblind says:

        That is not what the article says. It says that 3 still owe money.

        If all the government has is GM stock, then they don’t owe anything.

  3. FacebookAppMaker says:

    Consumerist, you may want to look over the first few sentences, and rethink the structure and what words were used. I’m assuming your saying all but 3 have paid back TARP funds? Well, you didn’t mention that at all. Also, instead of “from” you wrote “form”, though that’s easy enough to understand.

  4. hmburgers says:

    “While salaries will generally remain in the $500,000 or less area, around 83% of executive pay in 2012 will be in the form of company stock, thus how much these execs earn will ultimately be decided by how well their business performs.”

    Begin the pump and dump!

  5. Alliance to Restore the Republic of the United States of America says:

    A guillotine would be more appropriate.

  6. TravelWithDignity says:

    and how much of these companies reduced exposure to TARP is due to OTHER government grants and giveaways? They are just shifting money from one free slush fund to another.

  7. Press1forDialTone says:

    And if a RepubliThug (God help us all) gets into the White House, the
    TARP master can kiss his job goodbye and let the upper management
    compensation flow throughout the land as it once did in the days of yore.

    • hansolo247 says:

      Not a republican, but where in the Constitution is the power to regulate salaries given to the Executive branch?

      • ARP says:

        Where in the Constitution does it say that corporations can exist and are people?

        • LabGnome says:

          But only people in ways that are beneficial and are not people in ways that are not beneficial. They want the benefits but none of the responsibilities or consequences of being people.

  8. cecilsaxon says:

    I hope folks understand what this story details. The TREASURY DEPARTMENT is dictating salary rates. This is exactly what Obama said he wanted to happen back in Feb of 2010.

    These idiotic TARP laws diminish congressional authority, blur the separation of powers, and undermine the rule of law.

    • hansolo247 says:

      Exactly. The whole bankruptcy process is enumerated to the Legislature, but GM’s was managed almost totally by the Executive branch, with a great deal of crony-ism to boot…hardly the “uniform process” required by Article 1.

      • crashfrog says:

        No, that’s not accurate. Congress is empowered to establish “uniform law” on bankrupcies; they’re not required to administer the process.

        It has always been up to the executive branch to carry out the law; thus it’s completely constitutional and appropriate for the executive branch to have carried out the TARP provisions passed by Congress.

    • macnbc says:

      I don’t know if you’ve noticed, but Congress isn’t capable of handling pretty much anything these days. I doubt they could get a majority vote on determining the color of the sky. (One party would say “Blue”, and the other would refuse to agree on principle. Which party says what is interchangeable at this point.)

      I agree that the way our system is supposed to work, that Congress should be handling this, but quite frankly the Federal Government is pretty much broken these days.

  9. Blueskylaw says:

    “around 83% of executive pay in 2012 will be in the form of company stock, thus how much these execs earn will ultimately be decided by how well their business performs”

    Thus the dog and pony show will continue. Corporations will once again pump up the numbers for short term profits in order to get their bonus and will forego long term growth that promotes financial stability.

    • LabGnome says:

      This is pretty much how I read it. Do the same practices that caused the mess in the first place, do risky behavior that will boost the company for a short duration, make off with the money before the company hits the wall full speed.

      Worst case scenario, it back fires and you need some more rescuing from the government to go back to the previous baseline.