U.S. cuts compensation to top GM execs, slashes GMAC stock grants

Posted: 2:20 p.m. March 23, 2010

U.S. cuts compensation to top GM execs, slashes GMAC stock grants

By Justin Hyde

Free Press Washington Staff

WASHINGTON – The Obama administration today said it had cut General Motors’ proposed 2010 pay for its top 25 workers, while agreeing with Chrysler’s decision to freeze the cash salaries of its executives and sharply reducing proposed stock grants by GMAC.

 

Kenneth Feinberg, the U.S. Treasury’s special master for executive compensation, also said he would review the pay granted to top executives in 2008 and 2009 if they received aid under the Troubled Asset Relief Program. While Feinberg has no power to force clawbacks if he finds pay too high, he can make his rulings public.

 

He also sought to show that his rulings, required by Congress under the bailout law, had not hurt hiring, saying 85% of the people whose salaries were covered by his rules last year are still with the companies.

 

“People at these five companies are not leaving these companies to go elsewhere,” Feinberg said.

 

While GM asked for cash salaries of more than $500,000 for 16 employees, Feinberg cut that number to eight. He did allow stock awards of up to $7.3 million, giving most of the top 25 employees compensation of at least $1.3 million, with Chairman and CEO Ed Whitacre granted $9 million.

 

Feinberg said GM’s annual cash salaries for the top 25 employees will decline by 7.5%, with only three of the 25 receiving a cash raise. Five employees have no increase, while 14 saw their cash compensation cut.

 

Treasury officials said GM will still be covered by Feinberg’s pay limits after it repays its loans by June. The rules will stay in place until Treasury unwinds the 60.8% stake of GM’s equity.

 

But the company will be allowed to speed up the vesting of some stock awarded under the rules.

 

Chrysler voluntarily froze the cash salaries of its top 25 employees at 2009 levels, and only one of those employees was granted compensation of $1 million. CEO Sergio Marchionne is paid by Fiat, and will receive no pay from Chrysler.

 

The government also sharply cut the pay at GMAC, eliminating the cash salary of its chief executive and slashing stock payments for the top 25 employees to $12.5 million from GMAC’s proposal of $29.4 million. CEO Michael Carpenter will be paid $8 million in stock, with no cash.

 

Feinberg did allow higher cash salaries at Chrysler Financial as it winds down its business.

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