WASHINGTON Jan 24 Pressure from financial
institutions and Treasury officials undermined an effort to
limit executive pay at seven companies rescued with taxpayer
money, a new government audit showed on Tuesday.
The official overseeing executive pay for bailout firms
limited cash compensation and made some reductions in pay, but
still approved compensation packages in the millions, the TARP
(Troubled Asset Relief Program) inspector general said in the
Former U.S. pay czar Kenneth Feinberg approved pay packages
worth $5 million or more from 2009 to 2011 for 49 top earners,
the report said.
"Special Master Feinberg said the companies pressured him to
let the companies pay executives enough to keep them from
quitting, and that Treasury officials pressured him to let the
companies pay executives enough to keep the companies
competitive and on track to repay TARP funds," the report said.
Public anger over high pay and billion-dollar bonuses at
bailed-out firms in 2008 prompted the Obama administration to
limit cash salaries at $500,000 and approve compensation
packages for the companies' top earners.
The report said the companies had "significant leverage"
over Feinberg in negotiating for excessive pay packages based on
historical pay, warning that if he did not provide competitive
pay packages, top officials would leave and go elsewhere.
"Rather than view their compensation through the lens of
partial government ownership, the companies argued that their
proposed pay packages were necessary to retain or attract
employees who were crucial to the company," the report said.
The companies affected were: AIG, Bank of America,
Citigroup, Chrysler Financial Services, Chrysler Holding,
General Motors, and Ally (formerly GMAC).
The report evaluating how the pay packages were set
suggested a need for a more uniform standard for compensation
It recommended that each request to exceed the $500,000 pay
limit be justified and that new guidelines be put in place to
ensure the decision process is evenhanded.
In Treasury's response, Acting Special Master, Patricia
Geoghegan, said her office had cut average cash compensation for
the top 25 executives at the seven companies that received
"exceptional" TARP assistance by more than 90 percent.
"Our office was effective at limiting compensation at the
seven companies over which it had authority, while ensuring the
companies were well-positioned to pay back the taxpayers'
investments," Geoghegan wrote.
She noted that Bank of America, Citigroup, Chrysler
Financial and Chrysler had exited TARP and that Ally, AIG and GM
were in the process of exiting the program.
The TARP audit was conducted between November 2009 and