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U.S. freezes Akerson’s pay, limits what GM execs make

Published: April 7, 2012 | 8:27 am
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The U.S. Treasury Department has frozen 2012 pay for General Motors CEO Dan Akerson and his counterparts at Ally Financial and AIG at 2011 levels because the government still owns a stake in all three companies.

The government also said the total compensation of GM’s top executives would be cut by 12%, or $8.8 million, from 2011 to 2012. However, some executives received pay increases while others’ pay is being cut.

The Treasury Department’s authority to limit the compensation of the top 25 executives at GM, AIG and Ally Financial is a condition of the $135.2 billion in government loans they received during the 2008 financial crisis. The U.S. government still owns about 26.5% of GM stock.

GM spokesman Jim Cain described the department’s move to limit compensation as “fairly routine.”

Documents released by the government also offer a glimpse at executive turnover at GM. At least two of GM’s top 25 executives have left the company since last year, according to Treasury documents.

Mark Reuss, president of GM North America, told reporters in January that he was worried the compensation limits would hurt the company’s ability to recruit and retain talented executives.

“There’s a lot of really good people in GM,” Reuss said then. “There are some people who haven’t worked in the auto industry their whole lives, people that want to try something different that pays.”

AIG still owes taxpayers about $36 billion. GM, which has repaid $8.1 billion of government loans, still owes about $25 billion, according to a Treasury spokesman. Detroit-based Ally owes about $12 billion.

The Congressional Budget Office projected in December that TARP losses would amount to $34 billion. The Obama administration has predicted a $68-billion loss.

Akerson’s 2012 pay package will remain $9 million. In 2011, that comprised a $1.7-million salary and $7.3 million in stock-based incentives. Michael Carpenter, CEO of Ally Financial, formerly GM financing unit GMAC, is set to earn $9.5 million in total compensation. AIG CEO Robert Benmosche will make $10.5 million.

The Treasury Department also is limiting the compensation of the companies’ most highly compensated executives.

According to Treasury documents, 14 of GM’s top 25 leaders received a collective increase of 8.4% over the last year. Nine executives who are new to the top 25 will earn 45.5% less than their predecessors. The executives aren’t listed by name, only by employee ID numbers.

Patricia Geoghegan, special master for TARP executive compensation, said in a letter to Janice Uhlig, GM’s executive director of global compensation, that Treasury was seeking to limit guaranteed cash in an effort to foster more performance-based compensation.

“Incentive compensation should be based on measurable performance goals that are designed by” an independent committee, Geoghegan wrote.

The government’s move to limit GM executive compensation for 2012 comes a week after Ford revealed that it paid CEO Alan Mulally $29.5 million in 2011, up 11% from 2010.

Sergio Marchionne, who heads Chrysler, Fiat and Fiat Industrial, received a combined $22.2 million from Fiat and Fiat Industrial in 2011, more than five times his 2010 compensation. Marchionne declined payment directly from Chrysler, of which Fiat owns 58.5%. Chrysler paid back its 2009 TARP loans last May and is no longer subject to compensation limits.


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