Treasury toughens stance; GM, Ally execs won’t get pay raises

Treasury toughens stance; GM, Ally execs won’t get pay raises
Sat, Apr 27

Dan AkersonWashington — Top executives at General Motors Co. and Ally Financial Inc., won’t get cash salary pay raises this year, as the Treasury Department’s pay czar took a tough line Friday.

The Treasury Department said CEO pay remains frozen, and overall compensation actually declined for the top 25 executives at both firms.

Treasury rejected cash salary pay increases that had been proposed for 12 of GM’s top 25 executives; Ally didn’t seek any cash raises.

Neither firm sought pay raises for their CEOs.

GM CEO Dan Akerson received $11.1 million for 2012 because of a change in the mix of salary stock and long-term stock, but Treasury said “the overall amount of CEO compensation has continued unchanged since 2010” — meaning he has received $9 million in annual compensation.

At Ally, CEO Michael Carpenter receives $9.5 million in total compensation; he gets no cash salary.

Overall cash collected by GM’s top executives will fall by 31 percent, or $6.6 million. The lower overall pay is attributed to 10 executives who are new to the top 25 in 2013; they saw cash compensation fall 57 percent compared to what executives made in 2012.

The tougher stance from the Treasury Department came after a congressional hearing in February criticized executive pay at GM and Ally.

GM spokesman Greg Martin defended the company’s executive pay proposal, which he noted Treasury called “generally consistent” with the government’s pay principles.

“Our request reasonably sought a more flexible, market-based approach to executive compensation,” he said. “In one of the most highly competitive industries, it’s important that GM have the tools to retain and attract the top talent needed to keep the company’s current momentum going and to create greater shareholder value.”

In its proxy filing Thursday, GM had said it was worried pay limits could hurt the company. “We are concerned that certain key employees, seeing no prospect of change this year, will lose patience and accept opportunities elsewhere,” the proxy stated.

Among the top 25 executives at Ally, overall cash salaries decreased $5 million or 31.4 percent; total direct compensation fell $18.8 million or 21 percent.

For the 16 Ally executives remaining in the top 25 from 2012, cash salaries remained the same; total direct compensation decreased $6.5 million or 10.2 percent. The seven executives new to the top 25 in 2013 saw cash salaries fall $5 million or 63 percent; total direct compensation decreased $12.3 million or 46.1 percent from the top 25 executives in 2012. Ally spokeswoman Gina Proia declined to comment on the pay rulings.

Treasury must approve salaries for the top 25 executives of companies receiving large bailouts under the $700 billion Troubled Asset Relief Program in 2008 and 2009.

It still holds a 16.4 percent stake in GM as part of its $49.5 billion bailout, and a 74 percent majority stake in Ally as part of a $17.2 billion bailout. Most pay at both companies — 81 percent in 2013 — is in the form of stock, meaning the majority of pay of executives depends on future performance, typically vesting over three years.

Overall, 2013 cash compensation for the top 25 executives at GM and Ally combined decreased 30.9 percent and their total direct compensation decreased 13.3 percent.

Treasury said for 2013, cash salaries for the top 25 executives at GM and Ally as a group are on average 4 percent below the median for cash salaries and 56 percent below the median for total cash compensation for positions at similar companies.

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