UPDATE 2-PNC pays bonuses to execs after getting TARP money

* Bonuses awarded after $7.6 billion TARP infusion

* PNC reduces perks to top executives

* PNC calls awards "reasonable and advisable" (New throughout, adds byline)

By Jonathan Stempel

NEW YORK, Feb 13 (Reuters) - PNC Financial Services Group Inc (PNC.N) said on Friday it has awarded bonuses for 2008 to its chief executive and other top officers, becoming the largest recipient of taxpayer money under the government's $700 billion Troubled Asset Relief Program to do so.

Chief Executive James Rohr was awarded a $3 million bonus, down from $3.5 million a year earlier. PNC also awarded bonuses of $1.3 million to President Joseph Guyaux, $1.24 million to Senior Vice Chairman William Demchack, $785,400 to Vice Chairman Timothy Shack and $710,000 to Chief Financial Officer Richard Johnson.

The awards are primarily in the form of restricted stock, and none of the awards to Rohr, Demchak and Johnson is in cash, the Pittsburgh-based bank said. Executives were eligible for awards under a 1996 incentive plan, it said.

PNC disclosed the awards in a U.S. Securities and Exchange Commission filing, nine days after posting a $248 million loss and announcing plans to cut 5,800 jobs by 2011. Shares of the bank have fallen 67.5 percent from their record high Sept. 19.

"The issue is how in the world banks keep good people to get us out of the hole we're in," said Brent Longnecker, president of Longnecker & Associates in Houston, an executive compensation specialist. "You have to do the right thing, from an attraction, retention and motivation perspective."

Investors, politicians and regulators have faulted banks for doling out big bonuses as the industry hemorrhages losses from soured loans, and tightens credit generally.

Requests for comment to Rep. Barney Frank, who heads the House Financial Services Committee, and to Pittsburgh Mayor Luke Ravenstahl were not immediately returned.

PNC received $7.6 billion of TARP money and used some of it to buy the Cleveland lender National City Corp, creating the nation's seventh-largest bank.

None of the banks that got more TARP money than PNC, including Bank of America Corp (BAC.N) and Citigroup Inc (C.N), are awarding bonuses to their chief executives for 2008.

In its filing, PNC said its personnel and compensation committee found the awards "reasonable and advisable, particularly in light of PNC's strong relative performance and management's avoidance of many of the poor decisions and business strategies that have weakened many financial institutions and have caused others to fail or be acquired."

Spokesman Brian Goerke said no TARP money is going toward bonuses. "This is coming from our business revenue," he said.

In Friday's filing, PNC said it reduced the maximum annual perks it awards any top executive to $10,000 from $50,000. It also said Rohr, Guyaux and Demchak will retain access to the bank's aircraft, but will pay for personal flights themselves.

PNC shares closed Friday down $3, or 9.7 percent, at $28.07 on the New York Stock Exchange. The bank announced the bonuses after U.S. markets closed. (Reporting by Jonathan Stempel; Editing by Andre Grenon and Carol Bishopric)