Report Number 14-001 September 24, 2014

Treasury Significantly Loosened Executive Pay Limits Resulting in 

Excessive Pay for Top 25 Employees at GM and Ally (GMAC) 

When the Companies Were Not Repaying TARP in Full and 

Taxpayers Were Suffering Billions of Dollars in Losses

Treasury Significantly Loosened Executive Pay Limits Resulting in Excessive

Pay for Top 25 Employees at GM and Ally (GMAC) When the Companies

Were Not Repaying TARP in Full and Taxpayers Were Suffering Billions of

Dollars in Losses

Report Number 14-001 September 24, 2014

Summary

When Congress passed the Troubled Asset 

Relief Program (“TARP”) and subsequent 

economic stimulus legislation, it placed 

limitations on executive compensation for 

TARP recipients, and left it to the U.S. 

Department of the Treasury (“Treasury”) to 

implement the limitations. Treasury created 

the Office of the Special Master for TARP 

Executive Compensation (“OSM”). Kenneth 

R. Feinberg served as the Special Master –

often called the pay czar – and was 

succeeded by Patricia Geoghegan, currently 

serving as the Acting Special Master. OSM 

has jurisdiction over compensation at 

companies that stood out from the more than 

700 TARP recipients because of the amount 

and nature of their exceptional bailout. OSM 

sets pay for the Top 25 employees at these 

TARP exceptional assistance recipients. The 

Top 25 includes the 5 senior executive 

officers and the next 20 most highly 

compensated employees. 

In January 2012 and January 2013, the 

Office of the Special Inspector General for 

the Troubled Asset Relief Program 

(“SIGTARP”) reported on the results of its 

evaluations of compensation set by Treasury

for Top 25 employees at companies that 

received TARP help deemed exceptional. 

SIGTARP’s reports highlighted that Treasury 

had failed to rein in excessive pay and failed 

to implement meaningfully SIGTARP’s 

recommendations to develop robust criteria, 

policies, and procedures to ensure it could 

meet its own pay-setting guidelines. 

In April 2013, shortly before the Acting 

Special Master approved compensation for 

Top 25 employees of the two remaining 

companies that received exceptional TARP 

assistance – Ally Financial Inc. (“Ally”) and 

General Motors Corporation (“GM”) –

Representative Jim Jordan, Chairman of the 

U.S. House Committee on Oversight and 

Government Reform Subcommittee on 

Economic Growth, Job Creation, and 

Regulatory Affairs, requested that SIGTARP 

determine the number and value of pay 

raises requested by Ally and GM and 

approved by Treasury, and the companyproposed and Treasury-approved 

compensation that exceeded Treasury’s paysetting guidelines. Shortly after receiving 

Congress’ request, SIGTARP initiated this 

evaluation with the specific objective to 

assess the 2013 pay packages proposed by 

the companies and the decisions made by 

Treasury for compensation for the Top 25 

employees at Ally and GM. 

What SIGTARP Found

Overall, SIGTARP found Treasury 

significantly loosened executive pay limits, 

resulting in excessive pay for Top 25 

employees at GM and Ally while the 

companies were not repaying TARP in full 

and taxpayers were suffering billions of 

dollars in losses. Treasury also made limited 

progress implementing recommendations 

previously made by SIGTARP. These were 

designed to promote good Government 

practices, improve transparency, 

consistency, and accountability and 

ultimately protect taxpayers from subsidizing 

excessive compensation at TARP 

companies. In 2013, OSM continued 

awarding excessive pay raises and only put 

back a minimal amount of long-term 

restricted stock as part of pay packages and 

eliminated it altogether again in 2014 from 

pay packages. In June 2013, OSM created 

for the first time a written policy and 

procedures. However, OSM’s policy merely 

recites TARP legislation and the TARP 

Standards for Compensation and Corporate 

Governance; Interim Final Rule (“IFR,” or 

“Treasury’s Rule”), both in existence prior to 

the establishment of OSM, leaving OSM as 

an office of Treasury that operates without 

formal written policies developed by that 

office. SIGTARP found that Treasury still 

lacks robust policies, procedures, or criteria 

to ensure that OSM’s guidelines are met. 
Treasury Significantly Loosened Executive Pay Limits Resulting in Excessive

Pay for Top 25 Employees at GM and Ally (GMAC) When the Companies

Were Not Repaying TARP in Full and Taxpayers Were Suffering Billions of

Dollars in Losses

Report Number 14-001 September 24, 2014

Both GM and Ally stood out from the other 

five companies previously under OSM’s 

jurisdiction. At the time OSM set pay for the 

Top 25 employees at GM and Ally in

April 2013, SIGTARP found that pay set by 

Treasury for Ally’s and GM’s top employees 

did not reflect that those companies were not 

repaying TARP in full after four years, 

resulting in billions of dollars in taxpayer 

losses. Moreover, at the time of Treasury’s 

pay determinations, it was public knowledge 

that the companies were not repaying TARP 

in full and Treasury had already suffered an 

$8.2 billion loss in GM, and Ally had made no 

repayments of the principal TARP 

investment. While Ally was under a 

March 2013 failed stress test, taxpayers 

suffered a loss of $845 million when Treasury 

sold Ally common stock in the market. While 

SIGTARP was conducting this evaluation, 

Treasury sold its remaining TARP shares of 

GM in the market to arrive at a total loss to 

taxpayers of $11.159 billion, and sold some 

additional Ally common stock in the market to 

arrive at total losses of $1.8 billion. 

In 2013, OSM approved cash salaries over 

$500,000 for more than one-third (16 of 47) 

of the top employees of GM and Ally. Year 

after year, Treasury has loosened executive 

pay limits, getting further and further away 

from the President’s announced pay reforms 

and pay limits used by Treasury in 2009, 

even as taxpayer losses mount. The 

President announced that top executives at 

firms receiving extraordinary help from U.S. 

taxpayers would have their compensation 

capped at $500,000, with any additional 

compensation in the form of stock that can’t 

be paid up until taxpayers are paid back for 

their assistance. Treasury, however, did not 

limit additional compensation beyond 

$500,000 to “stock that cannot be paid up 

until taxpayers are paid back,” as the 

President announced. For example, in 2013, 

OSM approved effectively only 5% of Ally 

employees’ compensation in the form of 

long-term restricted stock and then 

eliminated it entirely from Ally employees’ 

pay packages in 2014.

Treasury’s mounting exceptions to its own 

guideline restrictions on executive 

compensation resulted by 2013 in OSM 

moving further and further away from the 

President’s announcement and OSM’s prior 

guidelines. Instead of making meaningful 

reforms to its process, OSM rolled back its 

application of guidelines aimed at curbing 

excessive pay, whereby approving high pay 

driven by Ally and GM’s excessive pay 

proposals without independent analysis and 

under an ill-defined, pay-setting process that 

lacked objective criteria.

SIGTARP found several examples 

delineating OSM’s rolling back of guidelines. 

For example, Treasury approved at least 

$1 million in pay for every Top 25 employee 

in 2013 and increased compensation by 28% 

for GM and Ally Top 25 employees from 

2009 to 2013. Treasury tripled the number of 

GM and Ally employees who received cash 

salaries exceeding $500,000 from 2009 to 

2013 and allowed 89% of the employees to 

be paid cash salaries of $450,000 or more in 

2013. Treasury approved $3 million in pay 

raises, ranging from 4% to 20%, for nine GM 

employees in 2013, most of whom received 

raises in consecutive years. Treasury also 

continued to loosen time restrictions by a full 

year for employees to cash out company 

stock received as pay.

Additionally, in 2009, Treasury’s guideline 

was to set pay to “generally not exceed the 

50th percentile of total compensation for 

similarly situated employees.” The pay 

Treasury awarded most of the employees in 

2013 exceeded the market median based on 

comparable positions and companies as 

determined by Treasury. Treasury set pay 

for 88% (30 of 34 employees) of these 

proposed employees, which exceeds market 

medians. On an individual basis, these pay 

packages exceeded market medians by 

amounts ranging from $17,700 to 

$2.7 million, for a total of $22.9 million. Of 

the 30, Ally received 18 and GM received 12. 

Treasury appears now to have done away 

with this guideline because by 2014, 
Treasury Significantly Loosened Executive Pay Limits Resulting in Excessive

Pay for Top 25 Employees at GM and Ally (GMAC) When the Companies

Were Not Repaying TARP in Full and Taxpayers Were Suffering Billions of

Dollars in Losses

Report Number 14-001 September 24, 2014

Treasury set most of Ally’s pay between the 

50th and 75th percentiles. 

The pendulum in OSM’s pay decisions has 

swung too far in the direction of keeping 

companies competitive, without regard for 

the fact that the reason to keep companies 

competitive is so that they can repay 

taxpayers in full, but GM and Ally were not 

repaying taxpayers in full. Rather, taxpayers 

have suffered billions of dollars in losses on 

those TARP investments. 

Two aspects of Treasury’s pay-setting 

process and pay decisions serve as 

important lessons learned. First, loosening 

limits on executive compensation for 

companies unable to repay TARP subjects 

Treasury to criticism that is rewarding top 

executives at companies that are losing 

taxpayers’ money over the interests of the 

taxpayers already shouldering billions of 

dollars in losses on those investments.

Second, by setting pay further and further 

away from the President’s and Treasury’s 

announced limitations on executive

compensation for TARP company officials, 

Treasury is missing an opportunity for critical 

reforms to a material cause of the financial 

crisis and a strong deterrent to future 

bailouts.

What SIGTARP Recommends

In this report, SIGTARP made 11 

recommendations aimed at enhancing 

OSM’s pay-setting process and pay 

decisions. These recommendations include 

maintaining improved documentation of OSM 

and Treasury’s communications regarding 

compensation, performing and documenting 

independent analyses before OSM approves 

company requests for cash salaries 

exceeding $500,000, cash salaries 

exceeding market medians, and annual pay 

increases. SIGTARP also recommended 

OSM use long-term restricted stock as part of 

each employee’s compensation package to 

ensure compensation is tied to both the 

employee’s and the company’s performance, 

and the full repayment of TARP funds. 

Finally, SIGTARP recommended OSM 

enhance its written procedures regarding 

targeting median total compensation. 

Treasury provided an official written 

response to a draft of this report in a letter 

dated September 21, 2014, which is 

produced in full in Appendix I. Treasury did 

not clearly agree to implement any of the 

report’s recommendations, which were 

intended to improve transparency and 

program performance.
Treasury Significantly Loosened Executive Pay Limits Resulting in Excessive

Pay for Top 25 Employees at GM and Ally (GMAC) When the Companies

Were Not Repaying TARP in Full and Taxpayers Were Suffering Billions of

Dollars in Losses

Report Number 14-001 September 24, 2014

Table of Contents

Background .................................................................................................................................................... 1

SIGTARP’s January 2012 Report Found that Treasury Approved Excessive Compensation for 

TARP Recipients .................................................................................................................................... 3

SIGTARP’s January 2013 Report Found that Treasury Continues Approving Excessive 

Compensation for TARP Recipients....................................................................................................... 5

Treasury Made Limited Progress Since SIGTARP’s Last Report, but Did Not Make the 

Meaningful Reforms Needed...................................................................................................................... 8

Treasury-Approved Pay for Top Employees at GM and Ally Does Not Reflect that Those 

Companies Were Not Repaying TARP in Full After Four Years, Resulting in Billions of 

Dollars in Taxpayer Losses................................................................................................................... 11

Treasury Has Loosened Executive Pay Limits Year After Year, Getting Further and Further Away 

from the President’s Announced Pay Reforms and Pay Limits Used by Treasury in 2009, Even as 

Taxpayer Losses Mount............................................................................................................................ 16

In 2013, Treasury Approved at Least $1 Million in Pay for Every Top 25 Employee at GM and 

Ally, and Approved Total Compensation that Was More Than 28% Higher Than 2009 Pay ................. 22

Treasury Tripled the Number of GM and Ally Employees Paid More than $500,000 in Guaranteed 

Cash Salaries from 2009 to 2013 and Allowed 89% of the Employees To Be Paid Cash Salaries 

of $450,000 or More ................................................................................................................................. 24

In 2013, Treasury Approved $3 Million in Pay Raises for Nine GM Employees, Most of Whom 

Received Pay Raises in Consecutive Annual Years............................................................................. 26

Conclusion.................................................................................................................................................... 35

Recommendations........................................................................................................................................ 42

Appendix A – Objective, Scope, and Methodology..................................................................................... 45

Appendix B – Treasury 2013 Pay Determinations for Ally......................................................................... 47

Appendix C – Treasury 2013 Pay Determinations for GM ......................................................................... 48

Appendix D – Treasury 2014 Pay Determinations for Ally......................................................................... 49
Treasury Significantly Loosened Executive Pay Limits Resulting in Excessive

Pay for Top 25 Employees at GM and Ally (GMAC) When the Companies

Were Not Repaying TARP in Full and Taxpayers Were Suffering Billions of

Dollars in Losses

Report Number 14-001 September 24, 2014

Appendix E – OSM-Approved Total Pay over Market Medians in 2013.................................................... 50

Appendix F – Status on Each of SIGTARP’s Seven Recommendations..................................................... 51

Appendix G – Acronyms and Abbreviations............................................................................................... 53

Appendix H – Evaluation Team Members................................................................................................... 54

Appendix I – Management Comments......................................................................................................... 55
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 1

Report Number 14-001 September 24, 2014

Background

When Congress authorized the Troubled Asset Relief Program (“TARP”), it 

required that TARP recipients abide by certain rules on executive compensation, 

rules that it left to the U.S. Department of the Treasury (“Treasury”) to 

promulgate. Limits on executive compensation at TARP recipients are important 

for several reasons. First, limits on executive compensation for TARP companies 

are a tradeoff for the bailout because taxpayers are subsidizing TARP companies. 

As stated by former Treasury Special Master for TARP Executive Compensation 

(“Special Master”) Kenneth R. Feinberg in his book, Who Gets What: Fair 

Compensation after Tragedy and Financial Upheaval (“Who Gets What”):

Congress could not stand idly by and accept a one-way bargain 

with Wall Street. There would have to be a price to pay for such 

Congressional largesse....If Main Street was required to come to 

Wall Street’s rescue, there would be a price to pay: leaders in 

Congress and the new Obama administration didn’t want to see 

headlines discussing how financial “fat cats” were collecting 

outrageous salaries from companies supported by taxes of ordinary 

citizens.

Second, limits on executive compensation at TARP companies serve as important 

reforms to a material cause of the financial crisis and a possible deterrent to future 

bailout requests. Former Treasury Secretary Timothy F. Geithner said that 

executive compensation played a material role in causing the financial crisis 

because it encouraged excessive risk taking. Congress specifically required in the 

TARP authorizing legislation that institutions in TARP abide by certain rules on 

executive compensation intended to avoid excessive risks. 

On February 4, 2009, the President held a press conference with former Treasury 

Secretary Timothy F. Geithner announcing reforms, including new limits on pay, 

stating:

We are going to be demanding some restraint in exchange for 

federal aid so that when firms seek new federal dollars, we won’t 

find them up to the same old tricks. As part of the reforms we’re 

announcing today, top executives at firms receiving extraordinary 

help from U.S. taxpayers will have their compensation capped at 

$500,000, a fraction of the salaries that have been reported 

recently. And if these executives receive any additional 

compensation, it will come in the form of stock that can’t be paid 

up until taxpayers are paid back for their assistance. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 2

Report Number 14-001 September 24, 2014

Seven companies had received TARP help deemed “exceptional” – because the 

amount and nature of their bailouts stood out from the more than 700 other TARP 

recipients. Those were American International Group, Inc. (“AIG”), Bank of 

America Corporation (“Bank of America”), Citigroup Inc. (“Citigroup”), Chrysler 

Financial Services Americas LLC (“Chrysler Financial”), Chrysler Holding LLC 

(“Chrysler”), General Motors Corporation (“GM”), and Ally Financial Inc. 

(“Ally”), formerly General Motors Acceptance Corp. (“GMAC Inc.”). Thirteen 

days after the President’s announcement, Congress enacted the American 

Recovery and Reinvestment Act of 2009 (“the Recovery Act”), which among 

other things, limited bonuses for the Top 251employees at TARP institutions 

(depending on the amount of TARP investment) unless paid in restricted stock 

that did not exceed one-third of total compensation. 

Responsible for promulgating rules limiting executive compensation for TARP 

companies, Treasury, through a rule known as the TARP Standards for 

Compensation and Corporate Governance; Interim Final Rule (“IFR,” or 

“Treasury’s Rule”), created the Office of the Special Master for TARP Executive 

Compensation (“OSM”), but gave it limited scope. OSM sets the annual pay for 

the Top 25 most highly paid employees at the seven TARP exceptional assistance 

companies, until the company is no longer in TARP.2 Treasury’s Rule articulated 

the following six principles for OSM: 

 Risk – the compensation structure should avoid incentives to take unnecessary 

or excessive risks that could threaten the value of the TARP recipient;

 Taxpayer Return – the compensation amount and structure should reflect the 

need for the TARP recipient to remain a competitive enterprise, to retain and 

recruit talented employees who will contribute to the TARP recipient’s 

success, and ultimately, its ability to repay TARP obligations;

 Appropriate Allocation – the compensation structure should appropriately 

allocate compensation between components such as salary and short-term and 

long-term incentives;

 Performance-based Compensation – an appropriate portion of the 

compensation should be based on performance metrics over a relevant period;

 Comparable Structures and Payments – the compensation amount and 

structure should be consistent with those for persons in similar positions or 

roles “at similar entities that are similarly situated”; and

 Employee Contribution to TARP Recipient Value – the compensation 

structure and amount should reflect the current or prospective contributions of 

an employee to the value of the TARP recipient.

 

1 The Top 25 includes the 5 senior executive officers and the next 20 most highly compensated employees. Members of

the Top 25 may vary from year to year.

2 The Special Master also approves compensation structures, rather than individual pay, for the next 75 most highly 

compensated employees. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 3

Report Number 14-001 September 24, 2014

SIGTARP’s January 2012 Report Found that Treasury Approved 

Excessive Compensation for TARP Recipients

On January 23, 2012, the Office of the Special Inspector General for the Troubled 

Asset Relief Program (“SIGTARP”) issued a report over how Treasury’s OSM set 

pay for the Top 25 employees at the seven TARP companies under OSM’s 

jurisdiction. SIGTARP reported that Former Special Master Kenneth R. 

Feinberg, who served as Treasury’s Special Master from June 15, 2009, to 

September 10, 2010, stated that the six principles contained in Treasury’s Rule are 

inherently inconsistent, and therefore he determined pay for Top 25 employees in 

a three-step methodology using what he called “prescriptions,” or guidelines.

OSM Determined Pay for the Top 25 Employees in a Three-Step Methodology

First, OSM sets total compensation on the OSM prescription that it should 

generally not exceed the 50th percentile of total compensation for similarly 

situated employees. The first step in the formula was to determine each 

employee’s total compensation by basing it on the 50th percentile compensation 

level for the employee’s position, scope, and responsibilities relative to what their 

peers in comparable positions are earning. To determine the 50th percentile, 

OSM uses the U.S. Mercer Benchmark Database and Equilar’s ExecutiveInsight 

Total Compensation Report to determine whether the market data submitted by 

the TARP companies were reasonable.

Second, OSM sets cash salaries using an OSM prescription that salaries 

generally should not exceed $500,000 per year, except for good cause shown. 

As reported in SIGTARP’s January 2012 report, OSM staff told SIGTARP that 

the $500,000 cash salary limit was based partially on President Obama’s 

statement that salaries should be limited to $500,000. Former Special Master 

Feinberg told SIGTARP that he made the decision to limit cash salaries to 

$500,000 and to increase the proportion of compensation in the form of stock to 

strike a balance between reducing excessive risk and providing enough 

compensation to keep employees’ “skin in the game.” 

Third, OSM determines how much of the remaining compensation would be 

paid in stock salary with a value dependent on the company’s future success 

and long-term restricted stock. OSM determined the amount of stock salary 

and long-term restricted stock by deducting the cash salary from total 

compensation. The Recovery Act limited long-term restricted stock to one-third 

of the employee’s total pay. Under the process set up by former Special Master 

Feinberg, OSM calculated the amount of long-term restricted stock, and the 

remainder of the compensation package was salary in the form of company stock

(called “stock salary”), which vests immediately upon grant. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 4

Report Number 14-001 September 24, 2014

As reported in SIGTARP’s January 2012 report, to tie individual compensation to 

long-term company success, OSM used long-term restricted stock contingent on 

the employee achieving specific performance criteria. Long-term restricted stock 

does not fully vest until the repayment of TARP financial assistance. As reported 

in SIGTARP’s January 2012 report, OSM officials then told SIGTARP that 

companies were very hesitant to pay long-term restricted stock because there was 

no certainty that some of the companies would ever be free of TARP.

SIGTARP concluded in its January 2012 report that the Special Master could not 

effectively rein in excessive compensation because he was under the constraint 

that his most important goal was to get the companies to repay TARP. Given 

OSM’s overriding goal, the seven companies had significant leverage over OSM 

by proposing and negotiating for excessive pay packages, warning Special Master 

Feinberg that if he did not provide competitive pay packages, top officials would 

leave and go elsewhere, a claim that he said, at that time, did not come true as 

85% of the people were still at the companies.3 SIGTARP reported that, although 

generally OSM limited cash compensation and made some reductions in pay, 

OSM still approved total compensation in the millions. SIGTARP found that, 

although the Special Master created a prescription that cash salaries should not 

exceed $500,000 except for good cause, OSM was inconsistent in approving cash 

salaries in excess of $500,000.

SIGTARP also reported that getting out from under the Special Master’s purview 

was a factor for repayment of TARP exceptional assistance by Bank of America 

and Citigroup. Both companies were subject to OSM’s determinations only from 

October 2009 to December 2009. Citigroup officials told SIGTARP that, from 

the beginning, Citigroup’s perspective was that it would be subject only to the 

Special Master’s determinations for 2009. SIGTARP’s September 29, 2011, audit 

report, “Exiting TARP: Repayments by the Largest Financial Institutions,” 

reported that Citigroup’s CEO told SIGTARP that the desire to escape 

management compensation restrictions was a factor motivating Citigroup’s desire 

to exit TARP. Two of Bank of America’s former executives also told SIGTARP 

that executive compensation was an important factor in the firm’s decision to 

repay TARP. One of the executives told SIGTARP that executive compensation 

was a major factor behind the firm’s repayment decision and that the company did 

everything possible to get out from under the executive compensation rules. Once 

these two banks exited the exceptional assistance TARP programs and OSM’s 

jurisdiction, salaries and bonuses climbed.

 

3

Former Special Master Feinberg wrote in his book that it was not clear that the departure of the 15% who left was tied 

to compensation.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 5

Report Number 14-001 September 24, 2014

SIGTARP made three formal recommendations in the January 2012 report: 

 To ensure that OSM consistently grants exceptions to the $500,000 cash 

salary cap, OSM should substantiate each exception requested and whether 

the requests demonstrate or fail to demonstrate “good cause.”

 OSM should better document its use of market data in its calculations.

 OSM should develop more robust policies, procedures, or guidelines to help 

ensure that its pay determination process and its decisions are evenhanded. 

These measures will improve transparency and help OSM consistently apply 

Treasury’s principles of “appropriate allocation,” “performance-based 

compensation,” and “comparable structures and payments.”

SIGTARP’s January 2013 Report Found that Treasury Continues 

Approving Excessive Compensation for TARP Recipients

After issuing the January 2012 report and three formal recommendations, 

SIGTARP conducted a follow-up review, issuing a report in January 2013, 

finding that Treasury had again failed to rein in excessive pay. In January 2013, 

SIGTARP reported that, even though OSM set guidelines aimed at curbing 

excessive pay, SIGTARP previously warned that Treasury lacked robust criteria, 

policies, and procedures to ensure those guidelines are met. Despite SIGTARP’s 

prior report, Treasury made no meaningful reform to its process. Absent robust 

criteria, policies, and procedures to ensure its guidelines were met, OSM’s 

decisions were largely driven by the pay proposals of the same companies that 

historically, and again in 2012, proposed excessive pay. 

With the companies exercising significant leverage, Acting Special Master 

Patricia Geoghegan rolled back OSM’s application of guidelines aimed at curbing 

excessive pay. SIGTARP reported that OSM awarded $6.2 million in pay raises 

to 18 of the 18 employees for whom the companies proposed raises. SIGTARP 

reported that OSM awarded cash salaries of $500,000 or more to 70% of the 

executives under OSM’s pay-setting jurisdiction and allowed 94% of the top 

employees to be paid cash salaries of $450,000 or more. SIGTARP reported that 

OSM removed long-term, incentive-based stock as requested by the companies. 

SIGTARP found that, although OSM bettered its documentation of the employees 

awarded more than a $500,000 cash salary, OSM did not “substantiate” that high 

cash salary, but instead listed a justification that largely parroted what each 

company asserted to OSM without an OSM independent analysis. 

SIGTARP reported in January 2013 that OSM is effectively relinquishing some of 

OSM’s authority to the companies that have their own best interests in mind. 

OSM’s job is to look out for the interests of taxpayers, which it cannot do if it 

continues to rely to a great extent on the company’s proposals and justifications. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 6

Report Number 14-001 September 24, 2014

In January 2013, SIGTARP reported that guidelines aimed at curbing excessive 

pay are not effective, absent robust policies, procedures, or criteria to ensure that 

the guidelines are met; however, OSM still did not have robust policies, 

procedures, or criteria to ensure that pay for executives at TARP exceptional 

assistance companies stays within OSM guidelines. SIGTARP reported that 

perhaps the Acting Special Master thinks that OSM has already succeeded in 

achieving its mission by limiting compensation for these executives from preTARP levels, but the question is whether OSM’s existing policies are sufficient 

for taxpayers.

SIGTARP found in January 2013 that Treasury continues to award excessive pay 

packages, including large guaranteed cash salaries, but meaningful reform was 

still possible because GM and Ally remained under OSM’s jurisdiction. 

SIGTARP ended the report with a warning that without meaningful reform, 

including independent analysis by OSM, Treasury risks that TARP companies 

could potentially misuse taxpayer dollars for excessive executive compensation.

SIGTARP made four recommendations in the January 2013 report:

 Each year, Treasury should reevaluate total compensation of executives at 

TARP exceptional assistance companies remaining in the Top 25 from the 

prior year, including determining whether to reduce total compensation.

 To ensure that Treasury effectively applies guidelines aimed at curbing 

excessive pay and reducing risk taking, Treasury should develop policies, 

procedures, and criteria for approving pay in excess of Treasury guidelines.

 Treasury should independently analyze whether good cause exists to award a 

Top 25 employee a pay raise or a cash salary over $500,000. To ensure that 

OSM has sufficient time to conduct this analysis, Treasury should allow OSM 

to work on setting Top 25 pay prior to OSM’s receiving the company pay 

proposals, which starts the 60-day timeline.

 To be consistent with Treasury’s Rule that the portion of performance-based 

compensation compared to total compensation should be greater for positions 

that exercise higher levels of responsibility, Treasury should return to using 

long-term restricted stock for employees, particularly senior employees such 

as CEOs.

Representative Jim Jordan, Chairman of the U.S. House Committee on Oversight 

and Government Reform Subcommittee on Economic Growth, Job Creation, and 

Regulatory Affairs, requested that SIGTARP evaluate the 2013 companyproposed and Treasury-approved pay packages for the two remaining companies 

in TARP that had received exceptional financial assistance – Ally and GM. 

Chairman Jordan specifically asked SIGTARP to determine the number and value 

of pay raises requested by Ally and GM and approved by Treasury, and the 

company-proposed and Treasury-approved compensation that exceeded 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 7

Report Number 14-001 September 24, 2014

Treasury’s pay-setting guidelines. In April 2013, shortly before the Acting 

Special Master approved compensation for Ally and GM employees, SIGTARP 

initiated this evaluation with the specific objective to assess the 2013 pay 

packages proposed by the companies and the decisions made by Treasury for 

compensation for the Top 25 employees at Ally and GM. SIGTARP conducted 

this evaluation between April 2013 and September 2014 in accordance with the 

“Quality Standards for Inspection and Evaluation” established by the Council of 

the Inspectors General on Integrity and Efficiency. For a discussion of the 

evaluation’s scope and methodology, see Appendix A.

While SIGTARP was conducting this review, in December 2013, GM exited 

TARP, but not by repaying TARP. Instead, Treasury decided to sell its remaining 

shares of GM common stock at a loss. Taxpayers suffered an $11.159 billion loss 

on its TARP investment in GM. In November 2013, Ally repurchased from 

Treasury certain securities called mandatorily convertible preferred shares. In 

January 2014, Treasury sold shares of Ally common stock in the market at a loss 

of $845 million. On April 2, 2014, Treasury’s OSM issued 2014 pay decisions 

for the Top 25 employees at Ally, the last company under OSM’s jurisdiction. 

Days later, on April 15, 2014, Treasury sold additional Ally stock in the market at 

a loss of $918 million.
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 8

Report Number 14-001 September 24, 2014

Treasury Made Limited Progress Since 

SIGTARP’s Last Report, but Did Not Make 

the Meaningful Reforms Needed

Treasury made some progress after SIGTARP’s last report, which SIGTARP 

credits, although much more is needed to implement six of SIGTARP’s seven

recommendations, which are designed to protect taxpayers from subsidizing 

excessive compensation at TARP companies and through reforms of executive 

compensation practices that contributed to the financial crisis. 

 Awarding Pay Raises: After SIGTARP raised concerns that OSM awarded 

pay raises to 18 of the 18 employees for whom the companies had requested

raises for 2013 pay, OSM did not award pay raises to every employee for 

whom the companies requested. OSM denied pay raises to three GM 

employees new to GM’s Top 25 for whom the company had requested a raise, 

and denied pay raises to three Ally employees where the company had 

requested a raise. However, in 2013, OSM still awarded pay raises to each of 

the nine GM employees for whom GM had requested a raise and where the 

employee was in the Top 25 the prior year, and one GM employee in 2013 

(after OSM issued GM’s determination letter). 

 Removing Long-Term Restricted Stock: After SIGTARP raised concerns 

that in 2012 OSM had removed long-term restricted stock as part of pay for all 

Ally employees and for some GM employees and made a recommendation 

that Treasury return to using long-term restricted stock, in 2013 OSM put 

back long-term restricted stock, but only by a small amount (effectively 5%), 

then eliminated it from all pay packages in 2014. 

 Lacking Robust Policies, Procedures, Guidelines, and Criteria: After 

SIGTARP raised concerns about OSM’s lack of written policies, procedures, 

guidelines, and criteria, for the first time in the history of OSM, in June 2013, 

Treasury created a written policy and procedures (including guidelines). 

However, SIGTARP found that this policy and those procedures were not 

robust or complete and failed to address all of the concerns raised by 

SIGTARP in prior reports or all of SIGTARP’s recommendations. They 

appeared instead to be an attempt at some documentation of what OSM had 

done historically without meaningful change as recommended by SIGTARP. 

o OSM’s policy consists of 21⁄2 pages that merely recite TARP legislation 

and Treasury’s Rule (the IFR), both in existence prior to the existence of 

OSM, rather than recite any of the office’s policies. Accordingly, OSM is 

an office of Treasury that operates without meaningful formal written 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 9

Report Number 14-001 September 24, 2014

policies that should have been developed by the office. By any measure of 

oversight, that should not be acceptable. 

o OSM’s policy and procedures better document how the companies provide 

OSM market data and information and that OSM reviews the companyprovided market data for accuracy (as SIGTARP recommended), but fails 

to address whether OSM continues to follow prior OSM guidance to set 

total compensation to generally not exceed the 50th percentile. OSM’s 

determination letters instead discuss targeting cash compensation (not total 

compensation) at the 50th percentile; however, OSM’s policy and 

procedures are silent on this issue. 

o OSM’s written policy and procedures (including guidelines) are silent on 

how OSM evaluates company requests for pay raises, a concern 

previously raised by SIGTARP with no meaningful reform. There appears 

to be no consistent criteria for who gets a pay raise and who does not. 

SIGTARP found that Treasury documentation was only slightly better 

than last year when OSM essentially parroted the company’s explanation 

for the pay raise. OSM’s documentation does not rise to the level of what 

SIGTARP recommended because it does not show that Treasury 

conducted independent analysis on whether good cause exists to award a 

pay raise beyond the company’s explanation and where the person’s pay 

falls in relation to the median. 

o OSM’s policy and procedures do not include independent analysis that 

OSM conducts or criteria that OSM considers to award cash salaries 

greater than $500,000.

o OSM’s policy and procedures do not include criteria that OSM considers 

to remove long-term restricted stock, how much long-term restricted stock 

to award, or whether Treasury would award a greater portion of long-term 

restricted stock for positions that exercise higher levels of responsibility 

(as stated in Treasury’s Rule and SIGTARP’s recommendation).

o After SIGTARP raised concerns that Treasury should reconsider pay each 

year, including whether to reduce pay rather than maintain or increase pay 

as OSM had done in the past, OSM included in its policy and procedures 

that OSM may reduce pay; however, OSM did not address guidelines or 

criteria it would consider in reducing pay.

The Acting Special Master continues to state that OSM has implemented 

SIGTARP’s recommendations, and SIGTARP continues to tell Treasury and 

Congress in every SIGTARP Congressional report published quarterly that 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 10

Report Number 14-001 September 24, 2014

SIGTARP considers only one of its recommendations to OSM to be implemented 

(better documentation of OSM’s use of market data), why that is the case, and 

what SIGTARP would expect to see for implementation of its recommendations. 

The Acting Special Master simply cannot unilaterally determine that the 

recommendation has been implemented in the face of SIGTARP disagreement. 

Treasury has not taken sufficient meaningful action to address serious concerns 

raised by SIGTARP of excessive Treasury-approved pay and to implement 

SIGTARP recommendations. OSM continues to lack robust policies, procedures, 

and criteria, which would hold OSM accountable to its guidelines that OSM 

created in the public interest. SIGTARP is extremely concerned that Treasury is 

allowing OSM to not fully implement SIGTARP’s recommendations. OSM has 

started to document its process and procedures.4 However, it is clear, based on 

statements by OSM officials to SIGTARP and OSM’s determination letters, that 

OSM continues to use criteria for decision making not captured in its formal 

policy and procedures. It is unclear whether this is objective or subjective criteria 

proposed by the companies. 

Why this matters:

OSM is supposed to be acting in the public interest to limit excessive 

compensation at these two TARP companies. OSM meets with company officials 

and senior Treasury officials, all of which is undocumented, before making its 

decisions on pay. The importance of oversight over this process is critical to 

protect taxpayers. SIGTARP’s reports and recommendations represent another 

voice, the voice of taxpayers who fund TARP. SIGTARP’s recommendations are 

designed to promote good Government practices, improving transparency, 

consistency, and accountability, and ultimately ensure that taxpayers are not 

subsidizing excessive pay at TARP companies. SIGTARP believes a lack of 

robust criteria, policies, and procedures to ensure that OSM’s guidelines are met 

leads to a lack of transparency, inconsistency, and ultimately a lack of 

accountability to taxpayers because pay decisions are made more based on the 

company proposals and assertions rather than independent objective criteria 

designed to protect taxpayers. That is what OSM is doing, deciding which of the 

company’s proposals it will accept, with the companies each year requesting more 

and more pay with fewer and fewer restrictions. That may be how compensation 

committees work at private companies, but it is not good Government practice. 

Good Government requires objective criteria and procedures to ensure that 

guidelines designed to protect taxpayers are adhered to, rather than gutted by 

exception after exception.

 

4 Acting Special Master Geoghegan told SIGTARP that OSM told SIGTARP that it used the same pay-setting process 

for 2013 that it had used in prior years. 
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 11

Report Number 14-001 September 24, 2014

Treasury-Approved Pay for Top Employees at 

GM and Ally Does Not Reflect that Those 

Companies Were Not Repaying TARP in Full 

After Four Years, Resulting in Billions of Dollars 

in Taxpayer Losses 

By 2013, Treasury’s OSM had an incredibly narrow job: (1) to set individual pay 

for the Top 25 most highly paid employees at the only two major companies left 

in TARP – GM and Ally; and (2) to set compensation structures, rather than 

individual pay, for the next 75 most highly paid employees at GM and Ally. Both 

GM and Ally stood out from the other five companies previously under OSM’s 

jurisdiction because they were still in TARP after four years, they were not 

repaying TARP in full, resulting in taxpayer losses on the TARP investment and 

Government estimates of billions of dollars in losses. At the time OSM set pay 

for top employees at GM and Ally in April 2013, Treasury had already written off 

$8.2 billion in losses on the TARP investment, and Ally had not repaid any 

principal. Instead, Treasury had sold some securities in a March 2011 public 

offering. However, OSM’s documentation of its process for setting pay, and the 

pay OSM set for GM and Ally for 2013, do not reflect the differences. At the 

time OSM set pay for top Ally employees in April 2014, Ally had repurchased 

some mandatorily convertible preferred stock from Treasury, and taxpayers had 

suffered more than an $845 million loss on selling Ally stock in the market.

One of the six broad principles under which OSM operates is taxpayer return, and 

OSM has consistently touted as a measure of OSM’s success the positive returns 

to taxpayers from the other five TARP exceptional assistance recipients. For 

example, in February 2013, at a hearing of the House Committee on Oversight 

and Government Reform, Acting Special Master Patricia Geoghegan testified: 

In December 2012, AIG exited TARP, and the Federal Reserve 

and Treasury received back the entire $182 billion of assistance 

that AIG had received...with a total positive return of 

$22.7 billion. So, it is that kind of result that we are working for 

when we set our pay packages in our determination letter process.

Despite Treasury’s articulating six principles, according to OSM, return to 

taxpayers of the TARP funds is OSM’s primary objective. On October 21, 2010, 

at a hearing of the Congressional Oversight Panel, former Special Master

Feinberg testified that Treasury’s primary objective was to get taxpayers’ money 

back when setting compensation. He testified before the Congressional Oversight 

Panel on October 21, 2010:
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 12

Report Number 14-001 September 24, 2014

Congress felt that the single most important thing I could do is get 

those seven companies to repay the taxpayer....Secretary Geithner 

made that clear. Congress made that clear. The Administration 

made that clear. And we succeeded, with three of those companies 

already repaying. 

Former Special Master Feinberg recounts in his book:

[T]he secretary made clear that my primary goal as Treasury’s 

special master for TARP executive compensation was to determine 

payments for senior corporate officials that would maximize the 

likelihood that the designated companies would repay TARP loans 

as quickly as possible. The taxpayers had to be made whole. This 

was the top priority.

Although OSM measures success on a company fully repaying TARP, it is silent 

when taxpayers have not been made whole, have suffered losses, and are 

estimated by the Government to take future billions of dollars in losses, as was the 

case with GM and Ally in 2013 and continues with Ally in 2014. OSM’s 

April 2013 letter to GM setting 2013 pay states: “Including proceeds from the 

sale of GM common stock held by Treasury, GM’s repayments totaled 

approximately $30.4 billion as of the end of March 2013.” However, Treasury 

selling stock into the market does not constitute repayment by GM nor does 

selling back to GM at a substantial loss constitute a repayment in full of the debt 

by GM. Moreover, Treasury sold that stock at a loss of billions of dollars. Unlike 

prior OSM press releases touting returns to taxpayers, OSM’s press release 

highlights that GM exited TARP without highlighting the cost at which GM 

exited TARP – an $11.2 billion loss to taxpayers. OSM’s April 2, 2014, press 

release discusses that Ally has repaid $15.3 billion, or 89%, of the $17.2 billion 

investment to Ally, without disclosing that these did not fully consist of 

repayments of the principal by the company and that taxpayers had suffered 

$845 million in losses from stock sales during this time period by Treasury on the 

Ally TARP investment. 

OSM cannot use repayment of the TARP investment to tout its success without 

taking responsibility for the lack of repayment by the company and TARP losses 

to taxpayers by companies under OSM’s jurisdiction. Treasury’s sale of company 

stock into the market is not the same as repayment by the company of its debt in 

full. It was public knowledge when OSM set 2013 pay and 2014 pay that the 

Government estimated a loss on the remaining GM stock and Ally stock held by 

Treasury in exchange for the TARP investment. When OSM set pay for 2013, the

Congressional Budget Office and the Office of Management and Budget

estimated that Treasury’s losses on the auto bailout were at $20 billion and

$25 billion, respectively. Given that, as of March 31, 2014, taxpayers saw a 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 13

Report Number 14-001 September 24, 2014

$2.9 billion loss in Chrysler and no loss from Chrysler Financial, losses from 

Treasury’s investments in GM and Ally would account for most of Treasury’s 

$14.9 billion loss for the auto industry bailout. In 2013, Treasury continued to 

sell its GM stock well below its break-even prices and ultimately made its final 

sale in December 2013, which left taxpayers losing a total of $11.2 billion in GM. 

In 2014, Treasury continued to sell Ally stock at a loss, including days after OSM 

set 2014 pay. Taxpayers have already suffered a loss of approximately 

$1.8 billion on the TARP investment in Ally.

OSM’s policy and procedures do not provide any guidelines or criteria for taking 

into account a company’s lack of repayment of the initial TARP investment or 

whether Treasury was taking a loss on that investment. If return to taxpayers is 

the primary objective of Treasury’s OSM and a key metric of success, then 

policies, procedures, and guidelines should reflect how Treasury treats a lack of 

repayment by the company, as well as actual and estimated losses to taxpayers on 

the principal TARP investment. Moreover, despite being bound by a principle 

that compensation amount and structure should be consistent with those for 

persons in similar positions or roles “at similar entities that are similarly situated,” 

OSM’s policy, procedures, and guidelines do not reflect GM’s and Ally’s unique 

situation as the last two large TARP recipients that remained in TARP in 2013, or 

that Ally is the last large TARP recipient in 2014.

When OSM set 2013 pay for GM’s Top 25 employees in April 2013, it was public 

knowledge that GM was not repaying TARP in full and that Treasury had already 

suffered a loss of more than $8.2 billion on its TARP investment in GM. 

In November 2010, Treasury made two sales of GM stock into the market, selling 

412.3 million shares at a loss of $4.3 billion. Treasury sold the shares at an 

average price of $32.75 per share despite the fact that Treasury’s break-even price 

was $44.59 and $52.27 per share for the two sales, respectively. In 

December 2012, Treasury agreed to allow GM to buy back 200 million shares at a 

$3.2 billion loss to taxpayers. GM paid $27.50 per share despite the fact that

Treasury’s break-even price at that time was $53.98 per share. Between January 

and April 2013, Treasury continued to sell GM stock into the market and 

continued losing money on the investment, losing more than $900 million. As 

shown in the following table, Treasury continued to take losses for taxpayers by 

selling its GM common shares at prices well below Treasury’s break-even prices 

from November 18, 2010, the date of GM’s initial public offering, until Treasury 

sold its last remaining shares of GM common stock on December 9, 2013.
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 14

Report Number 14-001 September 24, 2014

FIGURE 1

COMPARISON OF TREASURY’S BREAK-EVEN AND SALES PRICES FOR GM STOCK

Source: SIGTARP analysis of Treasury’s February 19, 2014, Transaction Report.

When OSM set 2013 pay for Ally’s Top 25 employees in April 2013, it was public 

knowledge that Ally was not repaying TARP in full, and soon after taxpayers 

suffered significant losses.

Treasury continued to approve Ally’s requests for excessive pay in 2013 despite 

Ally’s failing the Federal Reserve Board’s (“FRB”) stress test and not repaying 

taxpayers. On March 7, 2013, while Treasury was determining Ally’s 2013 

compensation, FRB announced Ally had insufficient capital to withstand a severe 

economic downturn and, therefore, Ally failed FRB’s stress test. Ally was the 

only company of 18 of the largest bank holding companies (those with $50 billion

or more in total consolidated assets) to fail FRB’s capital adequacy test. In 

March 2011, Treasury generated approximately$2.7 billion in proceeds from 

selling Ally trust preferred securities in the market, not from a repayment by Ally. 

As of March 31, 2013, when OSM was setting pay for Ally, Ally had not made 

any repayments on the TARP principal investment. When OSM was setting pay 
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 15

Report Number 14-001 September 24, 2014

for Ally for 2014, taxpayers had already taken significant losses of more than 

$845 million from Treasury selling Ally stock into the market.

Why this matters:

Treasury’s pay decisions suggest that the principle of “repayment of TARP” 

inures to the benefit of top executives at TARP companies when Treasury sets 

pay. According to Feinberg’s book, taxpayer return was Secretary Geithner’s 

primary concern, described as:

[C]ompensation should reflect the need for the company to recruit 

and retain key employees so the company ultimately could repay 

every cent borrowed. Pay back the taxpayers – with interest. Every 

company subject to my jurisdiction, and much of the Treasury 

bureaucracy, referenced this variable in urging the special master 

to be generous when it came to compensation.

If Treasury wants to use “repayment of TARP” as a factor to approve “generous” 

pay, then the lack of repayment of every cent borrowed of TARP by GM and Ally 

should likewise be reflected by Treasury to limit or maintain pay, but not to 

loosen restrictions on pay. The goal, according to both Special Masters, was 

repayment in full to taxpayers, not losses. When Treasury was taking losses on its 

investment in GM, and Ally had not repaid taxpayers and was failing the stress 

tests, Treasury was rewarding the most highly paid GM and Ally employees with 

multimillion-dollar pay, pay raises, high guaranteed cash salaries, and little to no 

pay tied to long-term individual performance metrics. Taxpayers are already 

subsidizing losses on TARP investments in these companies and should not be 

forced by Treasury to subsidize excessive executive compensation. 
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 16

Report Number 14-001 September 24, 2014

Treasury Has Loosened Executive Pay Limits 

Year After Year, Getting Further and Further 

Away from the President’s Announced Pay 

Reforms and Pay Limits Used by Treasury in 

2009, Even as Taxpayer Losses Mount

Year after year, OSM is awarding pay to top executives at TARP companies that 

gets further and further away from the President’s 2009 announced reforms: 

The President’s Announcement:

As part of the reforms we’re announcing today, top executives at 

firms receiving extraordinary help from U.S. taxpayers will have 

their compensation capped at $500,000, a fraction of the salaries 

that have been reported recently. And if these executives receive 

any additional compensation, it will come in the form of stock that 

can’t be paid up until taxpayers are paid back for their assistance.

Treasury approved cash salaries over $500,000 in 2013 for more than one-third 

(16 of 47) of the top employees of GM and Ally.

In addition, the President announced that additional compensation would come in 

the form of stock that could not be paid up until taxpayers are paid back for their 

assistance. That form of stock is long-term restricted stock. However, in 2012, 

OSM removed long-term restricted stock from the pay packages of all Ally 

employees and some GM employees. After SIGTARP reported on OSM’s 

removal of that stock and Congress held a hearing on SIGTARP’s report, OSM 

gave extremely limited long-term restricted stock in 2013 (effectively 5% to Ally 

employees), only to eliminate it in 2014. Treasury is not limiting additional 

compensation beyond $500,000 to “stock that cannot be paid up until taxpayers 

are paid back,” as the President announced.

Why this matters:

OSM’s continued position that there is nothing requiring it to follow the 

President’s announcement misses the point because the President’s announcement 

was just as he stated – a reform – an important reform designed to combat one of 

the material causes of the financial crisis and provide a possible deterrent to future 

bailout requests. As stated by the President: “We are going to be demanding 

some restraint in exchange for federal aid so that when firms seek new federal 

dollars, we won’t find them up to the same old tricks.” First, it does raise the 
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Report Number 14-001 September 24, 2014

question of who OSM believes is responsible for implementing the President’s 

announcement, if not OSM. The bigger issue is that OSM’s failure to follow 

reforms could have the unfortunate effect of ending up in the same place that 

required reforms in the first place.

OSM’s Guidelines:

The pay awarded by OSM also appears to no longer follow Treasury’s 2009 and 

2010 guidelines created by former Special Master Feinberg. In SIGTARP’s 2012 

report, given that OSM did not have robust policies and procedures, SIGTARP 

reported on OSM’s methodology called “prescriptions,” or guidelines, as 

described by OSM officials to SIGTARP as follows:

First, OSM sets total compensation on the OSM prescription 

that it should generally not exceed the 50th percentile of total 

compensation for similarly situated employees. 

Second, OSM sets cash salaries using an OSM prescription 

that generally salaries should not exceed $500,000 per year, 

except for good cause shown. 

Third, OSM determines how much of the remaining 

compensation would be paid in stock salary with a value 

dependent on the company’s future success and long-term 

restricted stock. 

OSM no longer appears to follow these three guidelines.

50th Percentile: OSM’s prior guideline was to determine each employee’s total 

compensation by generally not exceeding the 50th percentile compensation level 

for the employee’s position, scope, and responsibilities relative to what their peers 

in comparable positions are earning.5 As SIGTARP reported in its 2012 report, 

OSM officials told SIGTARP that companies pushed back on the 50th percentile 

but, “if they were better than the 50th percentile, they wouldn’t be having 

discussions with OSM in the first place.” OSM appears to have abandoned its 

guideline that pay generally not exceed the 50th percentile of total compensation 

for similarly situated employees. The 50th percentile does not appear anywhere in 

OSM’s June 2013 policy and procedures. 

 

5 The companies supply the market data to OSM, which determines the 50th percentile. OSM checks this data for 

accuracy.
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Report Number 14-001 September 24, 2014

OSM no longer appears to be following Treasury’s guideline that total 

compensation generally not exceed the 50th percentile. In 2013 and 2014, OSM 

set pay for most of the Top 25 employees at Ally above the 50th percentile. 

Given that Ally is the only company remaining under OSM’s jurisdiction, OSM 

no longer follows the original guideline that total pay generally not exceed the 

50th percentile. 

SIGTARP found OSM’s policy and procedures to be confusing and applied 

inconsistently, making oversight difficult and lending to a lack of accountability 

of OSM. Cash salaries are a prime example of how a lack of robust policies, 

procedures, guidelines, and criteria can lead to Treasury going along with 

company requests for excessive pay without adhering to OSM’s own objective 

criteria. For example, although OSM’s policy and procedures are silent as to the 

50th percentile previously used by OSM under Special Master Feinberg to 

determine total compensation, OSM’s April 2013 pay determination letters to the 

companies state that OSM has concluded that cash salaries generally should target 

the 50th percentile as compared to persons in similar positions or roles at similar 

entities. With respect to cash salaries, GM proposed 12 and Ally proposed 9 

employees to receive a cash salary exceeding cash salary medians for a total of 

$1.5 million exceeding median cash salary, and OSM agreed to 90% of those 

requests.

OSM further appears to have eliminated the requirement that good cause be 

shown before authorizing a cash salary over $500,000, thereby loosening a check 

and balance available to limit excessive compensation.

Why this matters:

Without any criteria to ensure that it consistently applies its own “conclusion” to 

target cash salaries at the 50th percentile, OSM approaches it on a case-by-case 

determination as proposed by the company. SIGTARP found that OSM approved 

90% of the company’s proposals (19 of 21 employees) for salaries to exceed cash 

market medians. Some of these cash salaries exceed the 50th percentile 

significantly. Treasury approved these cash salaries to exceed market medians by 

amounts ranging from $6,800 to $187,000 for a total of $1.3 million without a 

specific link to the establishment of good cause. Following is a detailed list of 

each approved cash salary that exceeded market medians:
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 19

Report Number 14-001 September 24, 2014

TABLE 1

Source: SIGTARP analysis of OSM’s 2013 determination memorandums and company proposals.

$500,000 Cash Salary: OSM’s prior “prescription,” or guideline, was that 

generally salaries should not exceed $500,000 per year, except for good cause 

shown – a guideline much stronger than what OSM currently follows. OSM’s 

newly written procedures dated June 2013 state: “Base salary paid in cash should 

in most cases not exceed $500,000.” OSM appears to have changed OSM’s 

standard to one where a majority of cash salaries not exceed $500,000 and 

removed the requirement that tied the increase to “for good cause shown.” 

Stock Salary and Long-Term Restricted Stock: OSM previously determined the 

amount of stock salary and long-term restricted stock by deducting the cash salary 

from total compensation. Under the methodology set up by former Special 

Master Feinberg, because the Recovery Act limited long-term restricted stock to 

OSM-APPROVED 2013 CASH SALARIES EXCEEDING MARKET MEDIANS 

Employee

ID

Number

Company Market Median

Cash Salary

OSM-Approved

Cash Salary

Amount of

Cash Salary OSM 

Approved over 

Market Median

931656 Ally $304,000 $491,000 $187,000

197253 Ally $324,000 $500,000 176,000

104428 Ally $398,000 $491,000 93,000

 5046 GM $390,000 $475,000 85,000

 3774 GM $402,500 $485,000 82,500

 2387 GM $416,000 $495,000 79,000

682168 Ally $525,000 $600,000 75,000

105336 Ally $425,000 $500,000 75,000

 1565 GM $420,000 $495,000 75,000

 1223 GM $425,000 $495,000 70,000

 6524 GM $435,000 $495,000 60,000

 9859 GM $475,000 $525,000 50,000

380289 Ally $342,000 $391,000 49,000

 9074 GM $378,000 $425,000 47,000

 7537 GM $566,000 $600,000 34,000

707713 Ally $525,000 $550,000 25,000

725547 Ally $485,000 $500,000 15,000

567303 Ally $485,000 $500,000 15,000

 0230 GM $488,200 $495,000 6,800

Total $1,299,300
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 20

Report Number 14-001 September 24, 2014

one-third of the employee’s total pay, OSM first calculated the amount of longterm restricted stock, and the remainder of the compensation package was stock 

salary. As reported in SIGTARP’s 2012 report, to tie individual compensation to 

long-term company success, OSM previously used long-term restricted stock 

contingent on the employee achieving specific performance criteria. Long-term 

restricted stock does not fully vest until the repayment of TARP financial 

assistance – the very type of stock referenced in the President’s announcement. 

SIGTARP previously reported that, for 2012 pay, OSM removed long-term 

restricted stock based on the companies’ requests. When setting pay for 2013, 

OSM included an extremely limited amount of long-term restricted stock 

(effectively 5%), and when setting pay for 2014, OSM removed it altogether on 

Ally’s request. Therefore, Treasury has approved that none of the Top 25 

employees have pay that is tied to individual performance metrics related to the 

long-term performance of the company, or that cannot be paid until taxpayers are 

paid back. This removes an incentive for individuals to work toward repaying 

TARP.

Why this matters:

By moving further and further away from the President’s announced pay reforms 

and prior Treasury pay limits, OSM has moved closer and closer to the TARP 

companies’ proposed pay, and in doing so has cut back an important incentive 

that previously existed in pay limits and motivated Bank of America and 

Citigroup to repay TARP. As with SIGTARP’s earlier reports, SIGTARP found 

once again that these TARP companies receiving exceptional assistance failed to 

take into account the exceptional situations that necessitated their financial 

rescues. Their lack of appreciation is evident in Ally’s and GM’s proposed 

excessive compensation for their employees in asking for pay raises, higher cash 

salaries, and removal of long-term restricted stock, even though the companies 

were not repaying taxpayers in full, resulting in billions in losses.

Staying in TARP well beyond all other large TARP recipients does not mean that 

the return to taxpayers (OSM’s overriding principle) is getting better. At last 

year’s Congressional hearing on SIGTARP’s report, former Special Master 

Feinberg submitted for the record a letter in which he states that the market and 

economy have changed since OSM was established and that the initial pay 

prescriptions promulgated during his tenure may still be valid and credible, but 

waivers and exceptions are to be more frequent and expected in light of changing 

market conditions. Changes in the market should already be taken into account in 

OSM-approved pay through the use of a market median (the 50th percentile). 

Good Government requires objective standards and criteria set by the 

Government, rather than a standard of how many excessive pay requests by 

companies Treasury grants. Treasury must hold the line, or risk that exception 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 21

Report Number 14-001 September 24, 2014

will give way to another exception subjecting Treasury to criticism of rewarding 

top employees at a company unable to repay TARP at the expense of taxpayers 

already suffering losses and at the expense of cutting back on needed financial 

crisis reforms and a possible deterrent to future bailout requests. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 22

Report Number 14-001 September 24, 2014

In 2013, Treasury Approved at Least $1 Million in 

Pay for Every Top 25 Employee at GM and Ally, 

and Approved Total Compensation that Was 

More Than 28% Higher Than 2009 Pay

By 2013, Treasury significantly loosened restrictions on total compensation. 

Last year, SIGTARP reported that, for 2012 pay, Treasury approved that all but 

one employee be paid at least $1 million. For 2013, Treasury approved pay 

packages worth at least $1 million for every Top 25 executive at GM and Ally. 

That means that Treasury approved that every employee for whom it sets pay in 

2013 be paid $1 million or more, significantly more than pay approved in 2009 

and 2010. 

While $1 million was the floor for Treasury-approved pay for top employees at 

GM and Ally in 2013, Treasury approved many to be paid much more, with an 

average pay of $3 million per employee.6 In 2009, Treasury approved 

$101 million in total compensation for 43 GM and Ally Top 25 employees, for an 

average of $2.4 million. Despite GM and Ally being the last two large companies 

in TARP in 2013, Treasury increased pay by 28% over 2009 pay amounts. In 

2013, Treasury approved $142 million in total compensation for 47 GM and Ally 

Top 25 employees, for an average of $3 million. Treasury approved total 

compensation of more than $5 million ($5.2 million to $9.5 million) for seven

employees at GM and Ally. Treasury approved total compensation packages 

ranging from $3 million to $4.71 million for 9 additional GM and Ally 

employees, and 31 pay packages ranging from $1 million to $2.9 million. 

The pay Treasury awarded most of these employees in 2013 exceeded the market 

median based on comparable positions and companies as determined by Treasury. 

GM proposed 16 and Ally proposed 18 employees to receive total compensation 

exceeding market medians by a total of $24.5 million. Treasury set pay for 88% 

(30 of 34 employees) of these proposed employees, which exceeds market 

medians. On an individual basis, these pay packages exceeded market medians 

by amounts ranging from $17,700 to $2.7 million, for a total of $22.9 million. Of 

the 30, Ally received 18 and GM received 12. For a detailed list of the pay 

packages that exceeded market medians, see Appendix E.

 

6 The 2013 pay determinations are located in Appendices B and C. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 23

Report Number 14-001 September 24, 2014

Why this matters:

Former Special Master Feinberg recounts in his book Who Gets What that 

Congress wanted limitations on pay at TARP recipients because constituents 

would be appalled at the idea of Congress using public funds to rescue 

private companies headed by corporate chieftains earning millions of dollars. 

SIGTARP has serious concerns that Treasury is rewarding top employees

with increased multimillion-dollar pay at companies that were not repaying 

TARP, leaving Treasury to sell the shares into the market at a significant loss to 

taxpayers. This leaves Treasury subject to criticism that it rewards top executives 

of companies unable to repay their bailouts over the very taxpayers who lost 

billions of dollars on those bailouts.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 24

Report Number 14-001 September 24, 2014

Treasury Tripled the Number of GM and Ally 

Employees Paid More than $500,000 in 

Guaranteed Cash Salaries from 2009 to 2013 

and Allowed 89% of the Employees To Be Paid 

Cash Salaries of $450,000 or More

Former Special Master Feinberg recounts in his book one principle he followed 

was “Guaranteed cash salary would be limited to $500,000 per year; any 

additional amount would require special master approval. (In the end, fewer than 

10 percent of the officials in the seven companies received such approval.)” OSM 

loosened the restriction threefold in 2013, giving more than one-third (34%) of 

employees under OSM’s pay-setting jurisdiction guaranteed cash salaries of more 

than $500,000.

In 2009, Treasury held the line on guaranteed cash salaries over $500,000 to two 

GM employees and three Ally employees using the Treasury guideline that cash 

salaries should generally not exceed $500,000. By 2013, Treasury tripled the 

number of GM and Ally employees paid more than $500,000 in cash from the 5 

employees in 2009 to 16 employees. 

SIGTARP in its two prior reports raised serious concerns about how Treasury was 

approving more and more employees to be paid guaranteed cash salaries of more 

than $500,000 without objective criteria, then allowing more and more employees 

to fall just under that threshold. In 2013, OSM approved 84% (16 of 19) 

company-proposed cash salaries exceeding $500,000. These salaries exceeded 

$500,000 by an aggregate $3.6 million.

7

 

Beyond this Treasury guideline, SIGTARP also found that OSM was not 

following the spirit of the guideline to limit guaranteed cash salaries. OSM 

allowed 89% (42 of 47) of all Top 25 employees at GM and Ally to be paid 

guaranteed cash salaries of $450,000 or more, including 8 employees paid cash 

salaries of exactly $500,000. A detailed list of each cash salary that exceeded 

$500,000, ranging from $525,000 to $1,700,000, follows:

 

7 Of the 16 approved cash salaries that exceeded $500,000, Ally received 6 and GM received 10. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 25

Report Number 14-001 September 24, 2014

TABLE 2

APPROVED CASH SALARY FOR 2013 OVER 

$500,000

Company 

Name

Employee 

ID

Approved 

Annual Base 

Salary (cash)

GM 4859 $1,700,000

GM 94 950,000

GM 2986 750,000

GM 7459 750,000

GM 5555 750,000

GM 5697 750,000

GM 3348 650,000

Ally 265967 600,000

Ally 102645 600,000

Ally 339212 600,000

Ally 682168 600,000

GM 5021 600,000

GM 7537 600,000

Ally 546145 591,000

Ally 707713 550,000

GM 9859 525,000

Source: SIGTARP analysis of OSM’s 2013 determination 

memorandums.

To ensure consistent and objective decision making, SIGTARP previously 

recommended that Treasury substantiate decisions on whether company requests 

demonstrate or fail to demonstrate “good cause” for approving cash salaries 

exceeding $500,000 and for approving pay raises. SIGTARP also recommended 

that Treasury develop policies, procedures, and criteria for approving pay in 

excess of Treasury’s guidelines. OSM’s documentation of its justifications has 

changed from last year, but continues to lack a showing of OSM’s independent 

analysis as SIGTARP recommended. The justifications include the company’s 

assertions and statements about where the employee’s compensation fell 

compared to peers (as determined by data provided by the company). The 

justifications do not show that OSM conducted independent analysis (as 

recommended by SIGTARP) to verify some of the assertions companies made, 

such as that employees were retention risks or crucial or analyzed beyond 

discussing the assertions with the companies and/or other Treasury officials or 

reading about the employees in newspaper articles.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 26

Report Number 14-001 September 24, 2014

Why this matters:

OSM’s job is to look out for the interests of taxpayers, which it cannot do if it 

continues to rely so heavily on the company’s justifications and requests without 

independent analysis. OSM’s continued argument that there is no $500,000 cash 

salary cap (as the President announced) misses the bigger risk of guaranteed high 

cash salaries. As SIGTARP reported in its 2012 report, according to OSM, 

OSM’s prior restriction that generally salaries should not exceed $500,000 per 

year was based in part on the President’s statement. SIGTARP also reported that 

former Special Master Feinberg said the decision to limit cash salaries to 

$500,000 and to increase the proportion of compensation in the form of stock was 

to strike a balance between reducing excessive risk and providing enough 

compensation to keep employees’ “skin in the game.” The President’s announced 

cap was a reform based on a material cause of the financial crisis. Weakening that 

restriction on executive compensation could have the very dangerous effect of not 

providing enough skin in the game and could tip the balance toward excessive 

risk. Treasury’s Rule states that compensation structures should avoid incentives 

to take unnecessary or excessive risks that could threaten the value of the TARP 

recipient.

In 2013, Treasury Approved $3 Million in Pay Raises for Nine GM 

Employees, Most of Whom Received Pay Raises in Consecutive 

Annual Years

In 2013, Treasury approved a pay raise for each of the nine employees previously 

in the Top 25 for whom GM had requested a pay raise. These raises were worth 

approximately $3 million in 2013, as shown in the following table: 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 27

Report Number 14-001 September 24, 2014

TABLE 3

Source: SIGTARP analysis of OSM’s 2012 and 2013 determination memorandums.

By several measures, the 2013 pay raises were excessive. First, Treasury raised 

the employees’ pay by an average of 9.4% as a group (from $32.3 million in 2012 

to $35.3 million in 2013). This exceeded the June 2013 Consumer Price Index 

(“CPI”) of 1.8%, which is a measure of inflation in the prices of goods/services,

by 422%. On an individual basis, each of the nine raises also exceeded the CPI, 

with the lowest raise 4% and the highest raise 20% more than the employees’ 

2012 compensation. 

Average total compensation for the nine individuals before the pay raises was 

$3.6 million, or approximately 7,000% higher than median household income in 

2012, which was approximately $51,000, according to the U.S. Census Bureau. 

The nine employees’ average total pay after the raises exceeded 2012 median 

household income by approximately 7,600%.

Eight of the nine employees also received raises in 2012 (two consecutive years), 

and five of these employees also received raises in 2011 (three consecutive years). 

The following table shows these pay raises: 

GM EMPLOYEE PAY RAISES

Pay Raise

 GM

Employee

 2012 

Total Pay ($) (%) 2013Total Pay

1 $4,850,000 $490,000 10 $5,340,000

2 4,250,000 460,000 11 4,710,000

3 5,400,000 450,000 8 5,850,000

4 4,300,000 410,000 10 4,710,000

5 5,000,000 325,000 7 5,325,000

6 2,925,000 300,000 10 3,225,000

7 1,332,500 267,500 20 1,600,000

8 2,150,000 250,000 12 2,400,000

9 2,100,000 75,000 4 2,175,000

Total $32,307,500 $3,027,500 $35,335,000
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 28

Report Number 14-001 September 24, 2014

TABLE 4

GM EMPLOYEE PAY RAISES FOR 2013

GM Employee

2010 

Total Pay

2011

Total Pay

Pay Raise

2012

Total Pay

Pay Raise

2013

Total Pay

Pay Raise

Total 

Pay Raises

Employees Who Received Three Consecutive Annual Raises

5697* $2,436,900 $3,500,000

 $1,063,100

 $4,300,000

 $800,000

 $4,710,000

 $410,000

 

 $2,273,100

2986* $2,778,850 $3,500,000

 $721,150

 $4,250,000

 $750,000

 $4,710,000

 $460,000 $1,931,150

4894* $2,120,050 $2,550,000

 $429,950

 $2,925,000

 $375,000

 $3,225,000

 $300,000

 

 $1,104,950

9635* $1,800,000 $1,900,000

 $100,000

 $2,150,000

 $250,000

 $2,400,000

 $250,000

 

 $600,000

3348* $2,024,750 $2,050,000

 $25,250

 $2,100,000

 $50,000

 $2,175,000

 $75,000

 

 $150,250

Employees Who Received Two Consecutive Annual Raises

5555 ** $4,200,000

 n/a

$4,850,000

 $650,000

 $5,340,000

 $490,000 $1,140,000

5021 ** $5,300,000

 n/a

$5,400,000

 $100,000

 $5,850,000

 $450,000

 

 $550,000

7459 ** $4,200,000

 n/a

$5,000,000

 $800,000

 $5,325,000

 $325,000 $1,125,000

Employee Who Received One Raise

3199 ** **

 n/a

$1,332,500

 n/a

$1,600,000

 $267,500

 

 $267,500

Total Raises $2,339,450 $3,775,000 $3,027,500 $9,141,950

Source: SIGTARP analysis of OSM’s 2010 through 2013 determination memorandums.

*Denotes these GM employees were not in the Top 25 in 2009.

**Denotes the GM employee was not among the Top 25 in that year.

OSM has not established meaningful criteria for the approval of pay raises or 

conducted independent analysis on pay raise requests for each employee as 

SIGTARP previously recommended. When SIGTARP asked Acting Special 

Master Geoghegan why she approved these pay raises, she told SIGTARP that 

almost all of them were below median. And these are people who have enormous 

responsibilities with regard to GM. And it is important, as you know, that GM 

remain competitive so that it can retain and recruit employees and so that it can 

maximize the return to taxpayers of the amounts owed under TARP. Geoghegan 

also said that some employees had “expanded responsibilities.”

The reasons the Acting Special Master gave to justify pay raises are the very 

things historically cited by the companies to justify proposals for excessive pay. 

In 2012, SIGTARP reported that, given OSM’s overriding goal (of TARP 

repayment), the seven companies had significant leverage over OSM by 

proposing and negotiating for excessive pay packages, warning Special Master 

Feinberg that if he did not provide competitive pay packages, top officials would 

leave and go elsewhere, a claim that he said, at that time in October 2010, did not 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 29

Report Number 14-001 September 24, 2014

come true as 85% of the people were still at the companies.8 Worse yet, unlike in 

2009 and 2010, this is not the same situation because GM and Ally are not 

repaying taxpayers in full. After these companies did not repay taxpayers in full 

during these years, Treasury made the decision not to hold the stock but instead to 

sell it into the market (and some back to GM) at substantial losses. 

Given the lack of any meaningful criteria and lack of any documentation of 

independent analysis for each employee, it is not transparent how OSM makes 

decisions on pay raises separate from the company’s assertions. If OSM followed 

its own process, pay for all employees should generally not exceed the market 

median (as determined by the companies). Therefore, it is unclear if OSM now is 

using pay raises to get the person to the market median. 

Why this matters:

Without objective criteria, OSM is making decisions on pay raises based on the 

company’s requests and threats about retention. The question should not be how 

many of the company-requested pay raises should be allowed, but rather should 

OSM be granting any pay raises for these companies that have been stuck in 

TARP and, if so, what is the justification for doing so. The companies continue 

requesting pay raises and Treasury keeps granting pay raises without regard for 

the fact that these companies are not repaying TARP in full and taxpayers are 

suffering losses. OSM cites the possibility of repayment to taxpayers for 

justification of pay raises, but these companies are not repaying taxpayers in full. 

Instead, Treasury is selling the stock into the market, and incurring billions of 

dollars in losses. Moreover, Treasury is awarding pay raises in excess compared 

to average households that continue to fund these very companies, raising some 

employees’ pay year after year.

 

8

Former Special Master Feinberg wrote in his book that it was not clear that the departure of the 15% who left was tied 

to compensation.
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 30

Report Number 14-001 September 24, 2014

Treasury Has Eliminated Long-Term Restricted 

Stock Tying Pay to Individual Performance and 

TARP Repayment, Which Was Typically

One-Third of Compensation Packages in 2009, 

and Loosened Time Restrictions When 

Employees Can Cash Out Company Stock

In his book, former Special Master Feinberg described Treasury’s principle of 

performance-based compensation as “the heart and soul of the regulations.” He 

wrote:

Only an executive’s base salary is guaranteed. The remainder of 

the compensation package depends on individual and corporate 

performance over at least three years. Short-term corporate 

success should not trigger additional compensation; instead the 

regulations focus on extended corporate growth. Corporate 

officials and the companies they manage should be joined at the 

hip when it comes to compensation.

OSM historically had used two types of stock in pay. The first is company stock, 

which accrues at the same time as cash salary paid and which is not contingent on 

an employee meeting individual performance metrics. Although the stock vests 

each pay cycle, it is generally redeemable (can be cashed out) only in three equal 

installments, beginning on the second anniversary of the grant date. The second 

is long-term restricted stock that is contingent on the employee meeting individual 

performance metrics and remaining at the company for three years. Long-term 

restricted stock vests after the three years, but can only be redeemed by the 

employee in 25% installments for each 25% of TARP obligations that are repaid. 

OSM cut back on both of these important pay limits.

Treasury accelerated when top employees can cash out company stock as part of 

salary: 

The impact of OSM cutting long-term restricted stock to little to nothing is that 

the pay that historically came in the form of long-term restricted stock would 

come in the form of company stock, which is earned by employees in every 

paycheck. Along with significantly increasing the amount of this company stock, 

in 2013 OSM continued its practice of loosening restrictions on when employees 

at GM and Ally could cash out this stock, giving yet again another benefit to those 

companies’ employees and cutting back on a retention tool. SIGTARP reported 

in 2012: “In testimony to the House Committee on Oversight and Government 

Reform, the Special Master [Feinberg] said that he used stock salary to encourage 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 31

Report Number 14-001 September 24, 2014

senior executives to remain at the companies to maximize their benefit from the 

profitability of the company.” In 2013, OSM made the decision that “because 

GM has made significant repayments of the Company’s TARP obligations, each 

redemption date of 2009, 2010, 2011, 2012, and 2013 stock salary may be 

accelerated by one year.” Acting Special Master Geoghegan did something 

similar for Ally.

Why this matters:

SIGTARP has serious concerns about OSM’s decision to accelerate when 

employees can cash out company stock. First, not only did OSM continue its 

practice to loosen this restriction on pay, which removes a retention tool, but 

OSM made a decision that has the impact of giving the top employees the 

opportunity to get cash quicker than they ever would have. In other words, OSM 

just gave more guaranteed cash and removed more of employees’ “skin in the 

game.” Second, SIGTARP questions OSM’s rationale to allow Ally and GM 

employees to redeem stock salary early. OSM’s policies, procedures, guidelines, 

and determination letters state stock salary can be redeemed early (after the first 

anniversary as opposed to after the second anniversary of when the stock salary is 

earned) if the company has begun to repay its TARP obligations. OSM, under 

these vague guidelines, permitted Ally and GM employees to receive accelerated 

stock salary, even though both companies’ TARP repayments, which largely 

constituted Treasury’s sales of Ally and GM common stock, left taxpayers 

shouldering billions of dollars in losses. Third, although there are some written 

criteria for accelerating stock redemption based upon companies beginning to 

repay TARP, some of the repayments were actually Treasury’s sale of stock in the 

open market, which led to billions of dollars in losses. This seems to be a 

perfect example of how OSM’s lack of policies, procedures, guidelines, and 

criteria for decision making led to OSM being swayed by a company request that 

serves to reward top employees and remove limits on pay. 

Treasury removed long-term restricted stock from pay:

In addition, over the last three years, OSM got further and further away from 

using long-term restricted stock as a limit on pay – previously the “heart and soul” 

of Treasury’s limits on pay – eliminating it in 2014 as shown by the following 

chart.9 

 

9 The Acting Special Master did not approve long-term restricted stock for Ally employees in 2012 and 2014.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 32

Report Number 14-001 September 24, 2014

FIGURE 2

AGGREGATE LTRS AS A PERCENTAGE OF AGGREGATE TOTAL COMPENSATION 

FOR TOP 25 EMPLOYEES 2009-2014

Source: SIGTARP analysis of OSM’s determination memorandums.

*There were seven companies in 2009 receiving TARP exceptional assistance (AIG, Ally, Bank of America, Citigroup, GM, 

Chrysler, Chrysler Financial; five companies in 2010 (AIG, Ally, Chrysler, Chrysler Financial, GM); four companies in 2011

(AIG, Ally, Chrysler, GM); three companies in 2012 (AlG, Ally, GM); two companies in 2013 (Ally and GM); and one

company in 2014 (Ally).

After raising serious concerns that Treasury removed long-term restricted stock 

for every Ally employee in 2012, SIGTARP recommended that Treasury return to 

using long-term restricted stock. Treasury’s response was paltry at best. In 2013, 

Treasury approved five GM employees to not receive any long-term restricted 

stock as a limit on pay (one more than in 2012), and Treasury effectively

approved a blanket 5% of the Ally employees’ pay in long-term restricted stock.

10

 

 

10 In 2013, Treasury approved 10% of Ally employees’ total pay in the form of long-term restricted stock, but effectively 

it was only half of that amount (5%) because it was pro rata as of July 1, 2013, meaning that prior to that date it was 

delivered as stock salary.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 33

Report Number 14-001 September 24, 2014

OSM’s blanket award of 5% is inconsistent with Treasury’s Rule that the portion 

of performance-based compensation should be greater for positions in which 

employees exercise higher levels of responsibility.

11

 OSM’s decision to allocate 

effectively only 5% of Ally employees’ pay in the form of long-term restricted 

stock is also inconsistent with OSM’s 2013 determination memorandum, which 

states: “In most circumstances a large proportion of compensation should be held 

or deferred for a period of at least three years.” A 5% allocation of long-term 

restricted stock is not by any measure a “large portion.” 

SIGTARP reported in 2013 that OSM had no documented criteria for taking away

long-term restricted stock, leading to a lack of accountability and transparency. 

SIGTARP reported that Acting Special Master Geoghegan told SIGTARP at that 

time that when OSM takes away long-term restricted stock, it is because the 

individual may be very senior, may wish to retire, or otherwise will be leaving. In 

September 2013, under this evaluation, the Acting Special Master told SIGTARP 

that long-term restricted stock is not appropriate when the employee is nearing 

retirement or when the company is in the process of restructuring and possibly 

disposing of divisions in which case executives may have their jobs eliminated. 

She also told SIGTARP that she eliminated long-term restricted stock for top Ally 

employees in 2012 because a lot of these executives were at risk of losing their 

jobs. This is a perfect example of a lack of written objective criteria by which 

Treasury makes decisions, with OSM parroting the reason Ally gave OSM for its 

request to eliminate this pay limit. It is also an example of a lack of independent 

analysis by OSM to verify what the company told her. SIGTARP’s 2013 report 

found that OSM removed this important pay limit for all Top 25 Ally employees 

in 2012, even though only three of those employees worked at Residential

Capital, LLC (Ally’s financial mortgage subsidiary that filed for bankruptcy on 

May 14, 2012). Moreover, most of Ally’s Top 25 employees in 2012 remained 

among Ally’s Top 25 in 2013.

When asked why OSM approved so little long-term restricted stock for Ally 

employees in 2013, the Acting Special Master told SIGTARP that she wanted to 

keep in place Ally’s 2012 compensation structure (where none of the employees 

had long-term restricted stock) while moving to a more standard pay structure. In 

May 2013, Ally requested that OSM revise 2013 pay to eliminate all long-term 

restricted stock and replace it with stock salary, citing the company’s ongoing 

restructuring and difficulty with retention. OSM declined the request in 

June 2013, only to eliminate all long-term restricted stock 10 months later, under 

the 2014 determinations, at the request of Ally.

 

11 OSM’s determination memorandum states that Ally’s long-term restricted stock for 2013 is effective pro rata as of 

July 1, 2013, and prior to that date will be delivered as stock salary. 
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 34

Report Number 14-001 September 24, 2014

Why this matters:

In 2012, and again in 2014, Treasury completely removed long-term restricted 

stock from every Ally employee’s pay package, removing a key incentive for 

individual employees to work toward repaying taxpayers and important limits and 

reforms on executive pay at TARP companies. Treasury’s removal of long-term 

restricted stock contradicts two of the six principles outlined in Treasury’s Rule: 

1) performance-based compensation – an appropriate portion of the compensation 

should be based on performance metrics; and 2) appropriate allocation – the 

compensation structure should appropriately allocate compensation between 

components such as salary and short-term and long-term incentives. While OSM 

has kept stock salary as part of pay packages, the value of that stock is based on 

the company’s performance, not on individual performance metrics. Long-term 

restricted stock is based on individual performance related to metrics tied to the 

long-term success of the company and repaying taxpayers. In SIGTARP’s 2012 

report, SIGTARP reported that OSM used long-term restricted stock to tie 

individual compensation to long-term company success. Now that Treasury has 

removed it from pay packages, no individual has to meet any performance metric 

to receive their pay or wait until taxpayers are paid back, just as Ally wanted.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 35

Report Number 14-001 September 24, 2014

Conclusion

Former Treasury Secretary Timothy F. Geithner said that executive compensation

played a material role in the financial crisis. As restraint in exchange for taxpayer 

bailouts, Congress and the President announced that Troubled Asset Relief 

Program (“TARP”) recipients would be required to abide by certain rules on 

executive compensation, rules that the U.S. Department of the Treasury 

(“Treasury”) was required to promulgate. In February 2009, the President 

announced “reforms” that “top executives at firms receiving extraordinary help 

from U.S. taxpayers will have their compensation capped at $500,000, a fraction 

of the salaries that have been reported recently. And if these executives receive 

any additional compensation, it will come in the form of stock that can’t be paid 

up until taxpayers are paid back for their assistance.” After the President’s 

announcement, Treasury promulgated a rule that listed six principles to keep pay 

for TARP companies in the interest of taxpayers, principles that Treasury’s 

former Special Master for TARP Executive Compensation (“Special Master”) 

Kenneth R. Feinberg found inherently inconsistent. Therefore, he developed a 

three-step methodology using what he called “prescriptions,” or guidelines, that 

Treasury’s Office of the Special Master for TARP Executive Compensation 

(“OSM”) used to set pay for the Top 25 employees at seven companies that had 

received exceptional assistance under TARP. 

In 2012, the Office of the Special Inspector General for the Troubled Asset Relief 

Program (“SIGTARP”) reported that it found that the Special Master could not 

effectively rein in excessive compensation because he was under the constraint 

that his most important goal was to get the companies to repay TARP (one of 

Treasury’s six principles). Given OSM’s overriding goal, the companies had 

significant leverage by proposing and negotiating for excessive pay, warning that 

if he did not provide competitive pay packages, top officials would leave and go 

elsewhere, a claim that he said did not come true. The former Special Master 

recounts in his book, Who Gets What: Fair Compensation after Tragedy and 

Financial Upheaval (“Who Gets What”) that the primary goal in determining 

payments for corporate officials was to maximize the likelihood that the 

companies would repay TARP as quickly as possible because the taxpayers had to 

be made whole. SIGTARP reported in 2012 that, although OSM limited cash 

compensation and made some reductions in pay, OSM still approved total 

compensation in the millions. In 2013, SIGTARP published a second report that 

Acting Special Master Patricia Geoghegan rolled back OSM’s application of 

guidelines aimed at curbing excessive pay, effectively relinquishing some of 

OSM’s authority by relying to a great extent on the companies’ pay proposals or 

justifications rather than robust policies, procedures, or criteria to ensure that 

OSM’s guidelines are met.
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 36

Report Number 14-001 September 24, 2014

By April 2013, when Treasury’s OSM set 2013 pay, it found itself with an 

incredibly narrow and limited job because there were only two companies left in 

its jurisdiction. OSM touted as the ultimate metric of success for its pay decisions 

the fact that the other five companies had exited TARP with taxpayers being 

made whole (even though some of those companies did not repay but Treasury 

sold their stock in the market). General Motors Corporation (“GM”) and its prior 

auto financing arm General Motors Acceptance Corp. (“GMAC Inc.,” rebranded 

as Ally Financial Inc. (“Ally”)) were not only the last two companies under 

OSM’s jurisdiction, they were the last two large companies still in TARP after 

four years. GM and former GMAC were having trouble repaying TARP in full, 

taxpayers had suffered losses on both investments, and the Government estimated 

final losses of $20 billion to $25 billion on the auto bailout (including losses on 

GM, Ally, and the $2.9 billion loss taxpayers suffered from the TARP investment 

in Chrysler Holding LLC (“Chrysler”).

Having not received TARP repayments in full from GM and Ally, Treasury made 

the decision to sell the TARP stock in GM into the market and allowed GM to 

buy back some of the stock, both at significant losses. When Treasury’s OSM set 

2013 pay, taxpayers had already lost $8.2 billion on the TARP investment in GM. 

Ally had made no repayments of the principal TARP investment. While Ally was 

under a March 2013 failed stress test, taxpayers suffered a loss of $845 million 

when Treasury sold Ally common stock in the market. SIGTARP evaluated 

Treasury OSM’s determinations of 2013 pay for GM and Ally Top 25 employees. 

While SIGTARP was conducting this evaluation, Treasury sold its remaining 

TARP shares of GM into the market to arrive at a total loss to taxpayers of 

$11.159 billion, and sold some of its Ally common stock into the market to arrive 

at total losses of $1.8 billion. In April 2014, OSM’s job got even narrower as it 

set 2014 pay for the Top 25 employees at only one company, Ally. 

SIGTARP found that Treasury continued to award excessive pay by approving 

some of the companies’ requests for pay raises and high guaranteed cash salaries, 

and approving the companies’ requests to accelerate the time limit for corporate 

officials to cash out company stock received as pay, and to eliminate pay tied to 

individual performance metrics and the repayment of TARP (long-term restricted 

stock). SIGTARP found that after making the pay determinations in April 2013, 

Treasury made limited progress since SIGTARP’s last report but did not make the 

meaningful reforms needed and previously recommended by SIGTARP. In 

June 2013, OSM created for the first time a written policy and procedures. 

However, these appear to be an attempt to document what OSM had done 

historically without meaningful change as SIGTARP recommended. OSM’s 

policy merely recites TARP legislation and the Treasury Rule, both in existence 

prior to the establishment of OSM, leaving OSM as an office of Treasury that 

operates without formal written policies developed by that office. SIGTARP 

found that Treasury did not have robust policies, procedures, or criteria to ensure 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 37

Report Number 14-001 September 24, 2014

that OSM’s guidelines are met. Two aspects of Treasury’s pay-setting process and 

pay decisions serve as important lessons learned.

First, loosening limits on executive compensation for companies unable to repay 

TARP subjects Treasury to criticism that it is rewarding top executives at 

companies that are losing taxpayers’ money over the interests of the taxpayers 

already shouldering billions of dollars in losses on those investments. 

SIGTARP found the same thing that it reported in 2012 – that it continues to be 

the case that, given OSM’s overriding goal of repayment to taxpayers, GM and 

Ally had significant leverage by proposing and negotiating for excessive pay, 

warning that if OSM did not provide competitive pay packages, top officials 

would leave and go elsewhere. We note that this is a claim that Feinberg said did 

not come true. GM and Ally continued to lack an appreciation for their situation 

and were notably persistent in proposing more and more pay with fewer and 

fewer restrictions for their top officials. Every year they sought exception after 

exception to OSM’s guidelines. Bowing to the scare tactics of companies that 

employees would leave if OSM did not approve their proposed pay, in 2013 OSM 

continued to make pay decisions in a process that was ad hoc and inconsistent. 

OSM made decisions based on which of the company’s proposals it would 

approve, rather than using independent objective criteria designed to adhere to 

OSM’s pay guidelines. The result has been that, every year, Treasury awarded 

corporate officials at TARP companies more and more exceptions to Treasury’s 

pay guidelines, which appears to have encouraged the companies to propose more 

exceptions each year. 

Treasury-approved exceptions to its own guideline restrictions on executive 

compensation added up incrementally such that by OSM’s fifth year, 2013, OSM 

had gotten further and further away from the President’s announcement and 

OSM’s prior guidelines, even as taxpayer losses mount. SIGTARP found the 

following:

 In 2009, Treasury’s guideline was to set pay to “generally not exceed the 50th

percentile” of what their peers made. Treasury appears now to have done 

away with this guideline and by 2014 set most of Ally’s pay between the 50th

and 75th percentile. 

 Treasury-approved pay increased 28% for GM and Ally Top 25 employees 

from 2009 to 2013.

 Treasury awarded average pay of $3 million in 2013 to GM and Ally Top 25 

employees.

 In 2013, Treasury approved $3 million in aggregate pay raises for nine GM 

employees, most of whom received pay raises in consecutive annual years. 

Those raises were excessive. The pay raises ranged from 4% to 20%, 

averaging 9.4%, which exceeded the June 2013 1.8% Consumer Price Index 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 38

Report Number 14-001 September 24, 2014

(a measure of inflation) by 422%. Treasury awarded these nine employees 

pay that exceeded the 2012 median household income, according to the U.S. 

Census Bureau, by 7,600%.

 In 2013, Treasury approved 19 of 21 (90%) of the employees for whom GM 

and Ally had requested cash salaries that would exceed the median.

 By 2013, Treasury had loosened its guideline that guaranteed cash salary 

would be limited to $500,000 per year, which was based on the President’s 

statement that cash salaries not exceed that threshold. Treasury’s June 2013 

guideline states: “Base salary paid in cash should in most cases not exceed 

$500,000.”

 In 2009, Treasury awarded fewer than 10% of the officials in the seven 

companies to be paid cash salary in excess of $500,000, which tripled (34%) 

by 2013.

 In 2009, Treasury awarded 5 employees of GM and Ally cash salaries greater 

than $500,000, which tripled to 16 employees by 2013. 

 In 2013, Treasury allowed almost all of the remaining Top 25 employees at 

GM and Ally to be paid cash salaries of $450,000 or more.

 Typically one-third of compensation in 2009 for Ally and GM, Treasury has 

eliminated long-term restricted stock as part of pay for Ally in 2012 and 2014, 

which is the type of stock referred to by the President, and the only stock tying 

individual performance to TARP repayment.

 Treasury loosened time restrictions by a full year for employees to cash out 

company stock received as pay.

Just as SIGTARP found in its January 2013 report, SIGTARP found that Acting 

Special Master Patricia Geoghegan continued to roll back OSM’s application of 

guidelines aimed at curbing excessive pay, effectively relinquishing some of 

OSM’s authority by relying to a great extent on the company’s pay proposals or 

justifications rather than robust policies, procedures, or criteria to ensure that 

OSM’s guidelines are met. OSM is granting many company requests without 

independent analysis but instead based on the companies’ justification that the 

employees had enormous responsibilities and these exceptions are needed to 

retain the employees. While compensation committees at corporations may work 

like this, it is not good Government practice to get further and further away from 

important guidelines by approving exception after exception. Treasury has 

allowed OSM to not implement six of seven SIGTARP recommendations that 

were designed to keep OSM accountable to guidelines limiting excessive pay. A 

lack of robust criteria, policies, and procedures to ensure that guidelines are met 

leads to a lack of transparency, inconsistency, and ultimately a lack of 

accountability to taxpayers.

The pendulum in OSM’s pay decisions has swung too far in the direction of 

keeping companies competitive, without regard for the fact that the reason to keep 

companies competitive is so that they can repay taxpayers in full, but GM and 
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EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 39

Report Number 14-001 September 24, 2014

Ally were not repaying taxpayers in full. Rather, taxpayers have suffered billions 

of dollars in losses on those TARP investments. There should be no expectation 

on the part of the companies or Treasury that pay should increase as companies 

get farther in time from the crisis because that theory does not take into account 

the fact that four years have not led these companies to repay taxpayers fully. 

GM’s stock price never rose near to Treasury’s break-even price, but Treasury 

continued to award pay raises, cash in excess of $500,000, and multimillion-dollar 

pay. 

Treasury’s pay decisions suggest that OSM’s overriding objective/principle of 

“repayment of TARP” inures to the benefit of top executives at TARP companies 

when Treasury sets pay. According to Feinberg’s book, Secretary Geithner’s 

primary concern was “compensation should reflect the need for the company to 

recruit and retain key employees so the company ultimately could repay every 

cent borrowed. Pay back the taxpayers – with interest. Every company subject to 

my jurisdiction, and much of the Treasury bureaucracy, referenced this variable in 

urging the special master to be generous when it came to compensation.” 

Feinberg was referring to his role in 2009 and 2010, but since then GM and Ally 

have had much trouble repaying TARP fully, which is not reflected in OSM’s pay 

decisions. If Treasury wants to use “repayment of TARP” as a factor to approve 

“generous” pay, the lack of full repayment of TARP by GM and Ally should 

likewise be reflected by Treasury to limit or maintain pay, but not to loosen 

restrictions on pay more and more each year. Taxpayers are already subsidizing 

losses on TARP investments in these companies and should not be forced by 

Treasury to subsidize excessive executive compensation. 

Second, by setting pay further and further away from the President’s and 

Treasury’s announced limitations on executive compensation for TARP company 

officials, Treasury is missing an opportunity for critical reforms to a material 

cause of the financial crisis and a strong deterrent to future bailouts. 

Even though six of the seven TARP exceptional assistance companies are no 

longer in TARP, having strong restrictions on executive compensation at TARP 

companies remains critical for the future. Should a future bailout occur, it is 

important to have two playbooks. The first playbook the public needs would 

describe how Treasury and other Government officials actually made decisions in 

the TARP bailout, which requires transparency through written policies and 

procedures and good documentation. SIGTARP’s reports bring as much 

transparency to this decision making as is possible, but ultimately we are limited 

due to the lack of robust policies and procedures, and the ad hoc nature by which 

OSM makes decisions. The second playbook the public needs would describe 

how the Government could have improved, as determined by oversight agencies 

such as SIGTARP, so that future Government officials faced with the possibility 

of a bailout with limited time, have a go-to guide for best practices in decision 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 40

Report Number 14-001 September 24, 2014

making. In the height of the crisis, when the Government was making much of its 

decisions, a lack of some documentation or some objective criteria was to be 

expected for first-of-their-kind decisions. It was one thing in 2009 for OSM to 

operate without written policies, procedures, and criteria when OSM officials 

were just trying to get their hands around a wealth of information on pay at these 

companies. However, there is no excuse now for OSM to not have objective 

criteria to keep OSM accountable to strong limits on pay at TARP companies.

Moreover, OSM loosening restrictions on pay could have the effect of loosening 

incentives for individual corporate executives to work toward their company 

repaying TARP. Bank of America Corporation and Citigroup Inc. told SIGTARP 

that the limits on executive compensation motivated them to get out of TARP’s 

exceptional assistance programs as soon as they could in 2009. Ally is still in 

TARP today, and the Government should be keeping every incentive it has to get 

Ally to repay TARP. Now no individual at Ally has to meet any performance 

metric to receive their pay or wait until taxpayers are paid back (as the President 

announced). This is just what Ally wanted. Removing ties between individual 

pay and the long-term success of the company and the repayment of TARP by the 

company could have the dangerous effect that Ally executives with no stake in 

TARP repayment would not work toward repayment but instead watch the 

Government sell Ally common stock into the market at further losses to 

taxpayers.

In addition, by loosening restrictions on pay, OSM could be sending the message 

that the much-needed reforms coming out of the financial crisis are no longer 

necessary or required in exchange for Federal dollars. In 2009, the President 

announced restraints on pay at TARP companies as reforms, stating: “so that 

when firms seek new federal dollars, we won’t find them up to the same old 

tricks.” By getting further and further away from the President’s announced 

reforms and Treasury’s own guidelines, our nation may find the firms up to their 

same old tricks. 

OSM’s position that there is nothing requiring it to follow the President’s 

announcement misses the point because the President was announcing reforms 

designed to combat one of the material causes of the financial crisis. OSM’s own 

guidelines were created as reforms because leading up to the crisis, corporate 

officials at TARP companies were paid with high guaranteed cash salaries with 

“no skin in the game.” OSM’s guideline under former Special Master Feinberg 

that cash salaries generally not exceed $500,000 was about giving an employee 

“skin in the game.” Feinberg also used a significant amount of pay in the form of 

long-term restricted stock to “join at the hip” the individual and corporation, 

through individual performance focused on extended corporate growth over at 

least three years, not just short-term corporate success. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 41

Report Number 14-001 September 24, 2014

Weakening restrictions on executive compensation could have the very dangerous 

effect of not providing employees enough skin in the game, and could tip the 

balance toward excessive risk. In 2013, OSM tripled the number of corporate 

officials paid guaranteed cash salaries over $500,000 in 2009, and put almost 

everyone else just under that cash threshold. OSM accelerated by one year the 

prior time restriction for corporate officials to cash out corporate stock received as 

pay from 2009 to 2014, effectively guaranteeing more cash pay and reducing an 

employee’s skin in the game even further. OSM gave a tiny (effectively 5%) 

portion of pay to Ally employees in long-term restricted stock in 2013 tied to 

long-term corporate success and TARP repayment, only to remove it entirely in 

2014. Eroding reforms coming out of the financial crisis could have the 

dangerous effect of allowing companies to end up in the same place that required 

reforms in the first place. 

Finally, should this nation face the possibility of a future bailout, strong 

limitations on executive compensation on this still-existing TARP bailout could 

have a deterrent effect on companies asking the Government for Federal dollars. 

No one employee, no matter how valuable to his or her company, is important 

enough to risk weakening a deterrent to future bailouts.
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 42

Report Number 14-001 September 24, 2014

Recommendations

According to the Government Accountability Office’s Standards for Internal 

Control in the Federal Government, commonly referred to as the green book, 

internal control is an integral component of an entity’s management that provides 

reasonable assurance that the objectives of an entity are being achieved. 

Moreover, the green book states internal control, which comprises among other 

things, policies and procedures, helps management achieve desired results 

through effective stewardship of public resources. 

As discussed throughout this report, OSM’s lack of robust policies, procedures, 

and guidelines have contributed to why OSM continues to approve excessive 

compensation and why OSM continues to make exceptions to its own guidelines. 

More robust policies and procedures would help ensure OSM’s determinations are 

not excessive and will help OSM to reject company requests for excessive 

compensation. Specifically, SIGTARP recommends:

1. The Secretary of the Treasury should require OSM to maintain documentation 

of the substance of all OSM communications with TARP companies. 

2. The Secretary of the Treasury should require all Treasury employees to 

maintain documentation of all communications with TARP companies 

regarding compensation.

3. The Secretary of the Treasury should require OSM to maintain documentation 

of OSM’s communications with Treasury officials regarding compensation at 

TARP companies. 

4. The Secretary of the Treasury should require OSM to use long-term restricted 

stock as part of each TARP company’s employee’s compensation package to 

ensure compensation is tied to both the employee’s and the company’s 

performance, and the full repayment of TARP funds.

5. The Secretary of the Treasury should direct OSM to conduct an analysis, 

independent of company proposals and assertions, for an employee of a TARP 

exceptional assistance company to be paid a cash salary exceeding $500,000.

6. The Secretary of the Treasury should direct OSM to document its independent

analyses regarding the decision that a TARP exceptional assistance company 

employee be paid a cash salary exceeding $500,000. 

7. The Secretary of the Treasury should direct OSM to conduct an analysis,

independent of company proposals and assertions, for an employee of a TARP 
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Report Number 14-001 September 24, 2014

exceptional assistance company to receive an increase in annual 

compensation.

8. The Secretary of the Treasury should direct OSM to document its independent 

analyses regarding the decision that a TARP exceptional assistance company 

employee will receive an increase in annual compensation.

9. The Secretary of the Treasury should direct OSM to conduct an analysis, 

independent of company proposals and assertions, for an employee of a TARP 

exceptional assistance company to be paid a cash salary that exceeds the 

market median cash salary for similar positions in similar companies. 

10. The Secretary of the Treasury should direct OSM to document its independent 

analyses regarding the decision that a TARP exceptional assistance company 

employee be paid a cash salary exceeding market medians. 

11. The Secretary of the Treasury should direct OSM to include in its written 

procedures whether it will target, for each Top 25 employee of a TARP 

exceptional assistance company, median total compensation for similar 

positions in similar companies. 
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 44

Report Number 14-001 September 24, 2014

Management Comments and SIGTARP’s 

Response

Treasury provided an official written response to a draft of this report in a letter 

dated September 21, 2014, which is produced in full in Appendix I. Overall, 

Treasury disagrees with the draft report, as it has with our two previous reports. 

While Treasury’s letter states our report contains inaccuracies and omissions, we 

believe OSM disagrees with our conclusions. Treasury has not clearly agreed to 

implement any of the report’s recommendations, which were intended to improve 

the program. SIGTARP considered and addressed OSM’s comments in the report 

as necessary and appropriate.
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WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 45

Report Number 14-001 September 24, 2014

Appendix A – Objective, Scope, and Methodology

SIGTARP performed this evaluation under the authority of Public Law 110-343, as amended, which 

also incorporates the duties and responsibilities of inspectors general under the Inspector General 

Act of 1978, as amended. SIGTARP evaluated the Special Master’s decisions on executive 

compensation at Ally and GM, the two companies remaining in TARP that had received exceptional 

financial assistance. Our specific objective was to evaluate the 2013 pay packages proposed by Ally 

and GM and the decisions made by Treasury for compensation of the Top 25 at Ally and GM.

The scope of the evaluation covered Ally’s and GM’s 2013 Top 25 compensation proposals and 

OSM-approved pay packages. The evaluation began in April 2013 and ended in September 2014

and was performed in Washington, D.C. To evaluate OSM’s decisions on the company-proposed 

pay packages of the Top 25 employees, SIGTARP interviewed OSM officials and reviewed the 

company proposals, OSM’s 2013 determinations and supporting documentation for 47 Ally and GM 

Top 25 employees. During the evaluation, OSM issued in April 2014 its 2014 pay determinations for 

the Top 25 employees at Ally. Although SIGTARP did not open the evaluation to cover all 

decisions made by OSM, where applicable it has referred to the public results.

SIGTARP evaluated OSM’s decision making on pay and whether OSM implemented changes in 

response to SIGTARP’s earlier reports and recommendations. SIGTARP reviewed the Emergency 

Economic Stabilization Act of 2008, the American Recovery and Reinvestment Act of 2009, TARP 

Standards for Compensation and Corporate Governance; Interim Final Rule, Congressional 

testimony, OSM’s June 2013 written policy, OSM’s June 2013 written procedures as well as OSM 

pay determination letters. SIGTARP also reviewed former Special Master Kenneth R. Feinberg’s 

discussion of his work at OSM in his book, Who Gets What.

SIGTARP conducted this evaluation in accordance with the “Quality Standards for Inspection and 

Evaluation” established by the Council of the Inspectors General on Integrity and Efficiency. Those 

standards require that SIGTARP plan and perform the evaluation to obtain evidence sufficient to 

provide a reasonable basis for findings and conclusions based on the evaluation objectives. 

SIGTARP believes that the evidence obtained provides a reasonable basis for the findings and 

conclusions based on the evaluation objectives.

Limitations on Data

SIGTARP relied upon Treasury to identify and provide email communication and documents related 

to the executive compensation determination process. It is possible that the documentation provided 

by Treasury did not reflect a comprehensive response to SIGTARP’s documentation requests, 

potentially limiting SIGTARP’s review.
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Report Number 14-001 September 24, 2014

Use of Computer-Processed Data

SIGTARP did not use computer-processed data during this evaluation. SIGTARP obtained data 

from the company proposals received from Treasury and from determination memorandums 

available to the public on Treasury’s website.

Internal Controls

To assess internal controls over OSM’s determination process, SIGTARP interviewed OSM staff 

and requested OSM’s policies and procedures to determine the extent to which policies and 

procedures existed, and whether internal controls were reasonable and effective.

Prior Coverage

On January 28, 2013, SIGTARP issued evaluation report 13-001, “Treasury Continues Approving 

Excessive Pay for Top Executives at Bailed-Out Companies.” This report assesses OSM’s paysetting process for 2012 for the Top 25 employees of the remaining TARP exceptional assistance 

companies – AIG, GM, and Ally – in light of the findings and recommendations in SIGTARP’s 

previous report, issued January 23, 2012. 

On January 23, 2012, SIGTARP issued evaluation report 12-001, “The Special Master’s 

Determinations for Executive Compensation of Companies Receiving Exceptional Assistance Under

TARP.” This report addresses the process OSM designed to set pay packages and OSM’s decisions 

on compensation for the Top 25 employees at the companies that received exceptional assistance 

under TARP. Under this evaluation, SIGTARP assessed the criteria used by OSM to evaluate and 

make determinations of each company’s executive compensation and whether OSM consistently 

applied criteria for the determinations made in 2009, 2010, and 2011.

On October 14, 2009, SIGTARP issued audit report 10-002, “Extent of Federal Agencies’ Oversight 

of AIG Compensation Varied, and Important Challenges Remain.” This report addresses the extent 

of knowledge and oversight by Federal Reserve and Treasury officials over AIG compensation 

programs and, specifically, payments to retain employees in the AIG Financial Products (“AIGFP”) 

unit. The report also addresses the extent to which executive compensation restrictions or 

preexisting contractual obligations governed AIGFP retention payments, the outstanding AIG 

compensation issues requiring resolution, and Government actions to address them. 

On August 19, 2009, SIGTARP issued audit report 09-003, “Despite Evolving Rules On Executive 

Compensation, SIGTARP Survey Provides Insights on Compliance.” This report addresses the 

efforts of TARP recipients to comply with executive compensation restrictions and plans to comply 

with subsequently enacted changes in requirements.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 47

Report Number 14-001 September 24, 2014

Appendix B – Treasury 2013 Pay Determinations for Ally

EXHIBIT I

COVERED EMPLOYEES

2013 Compensation

Company Name: Ally Financial Inc.

Employee ID

 

Cash Salary

Stock Salary

(Performance 

based: The 

stock vests at 

grant and is 

redeemable 

in

three equal, 

annual 

installments 

beginning on 

the first 

anniversary 

of grant.)

 Long-Term

Restricted Stock 

(Performance 

based: Awarded 

based on 

achievement of 

objective 

performance 

goals. Generally 

vests after three

years of service. 

Transferability 

dependent on 

TARP repayment.)

Total Direct 

Compensat

ion (Cash 

salary + 

stock salary 

+ long-term 

restricted 

stock.) 280677 $0 $8,550,000 $950,000 $9,500,000

101512 $500,000 $1,480,000 $220,000 $2,200,000

102645 $600,000 $4,068,621 $518,736 $5,187,357

104428 $491,000 $1,975,900 $274,100 $2,741,000

105336 $500,000 $1,525,000 $225,000 $2,250,000

141296 $491,000 $1,673,930 $240,548 $2,405,478

159613 $421,008 $1,157,741 $175,416 $1,754,165

197253 $500,000 $2,778,650 $364,294 $3,642,944

265967 $600,000 $3,358,103 $439,789 $4,397,892

339212 $600,000 $400,000 $0 $1,000,000

353403 $416,000 $1,398,400 $201,600 $2,016,000

380289 $391,000 $1,310,900 $189,100 $1,891,000

391076 $500,000 $1,840,000 $260,000 $2,600,000

398005 $450,000 $1,233,000 $187,000 $1,870,000

513416 $491,000 $1,597,900 $232,100 $2,321,000

542135 $250,000 $2,270,000 $280,000 $2,800,000

546145 $591,000 $3,000,900 $399,100 $3,991,000

567303 $500,000 $2,020,000 $280,000 $2,800,000

673894 $490,988 $1,120,912 $179,100 $1,791,000

682168 $600,000 $4,462,345 $562,483 $5,624,828

707713 $550,000 $2,150,000 $300,000 $3,000,000

725547 $500,000 $2,020,000 $280,000 $2,800,000

931656 $491,000 $1,768,786 $251,087 $2,510,873

Comparison of 2013 compensation to prior year compensation for the employees listed above

• Overall: Overall cash decreased $5.0 million, or 31.3%, and total direct compensation decreased $18.8 million, or 20.8%.

• The 16 employees remaining in the Top 25 from 2012: Cash salaries remained the same and total direct compensation decreased 

$6.5 million, or 10.2%, from 2012. (This comparison is to target total direct compensation for 2012.)

• The seven employees new to the Top 25 in 2013: Cash compensation decreased $5.0 million, or 62.9%, and total direct 

compensation decreased $12.3 million, or 46.1%, from 2012.

Note 1: The total number of Covered Employees may be fewer than 25 because of separations from service since January 1, 2013.

Note 2: The amounts set forth in Exhibit I were to be effective January 1, 2013, except that the amounts in the “Long-Term Restricted 

Stock” column were to be effective pro rata as of July 1, 2013, and prior to that date were to be delivered as stock salary. 

Redemption of stock salary awarded to the CEO will be as described above. Redemption of stock salary awarded to other Covered 

Employees will be in three installments as described in the Determination Memorandum. In addition, prior to July 1, 2013, the 

amount indicated in the stock salary column for employee 339212 was to be paid at an annualized rate of $1.4 million.

Source: Treasury. 2013 approved pay determination for the Top 25 executives at Ally as of April 26, 2013.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 48

Report Number 14-001 September 24, 2014

Appendix C – Treasury 2013 Pay Determinations for GM

EXHIBIT I

COVERED EMPLOYEES

2013 Compensation

Company Name: General Motors Company

Employee ID

 

Cash 

Salary

Stock Salary

(Performance 

based: The 

stock vests at 

grant and is 

redeemable 

in

three equal, 

annual 

installments 

beginning on 

the first 

anniversary 

of grant.)

 Long-Term

Restricted Stock 

(Performance 

based: Awarded 

based on 

achievement of 

objective 

performance goals. 

Generally vests 

after three years of 

service. 

Transferability 

dependent on TARP 

repayment.)

Total Direct 

Compensation 

(Cash salary + stock 

salary + long-term 

restricted stock.)

4859 $1,700,000 $7,300,000 $0 $9,000,000

0094 $950,000 $1,187,500 $1,000,000 $3,137,500

0230 $495,000 $840,000 $665,000 $2,000,000

1223 $495,000 $626,000 $515,000 $1,636,000

1565 $495,000 $660,000 $525,000 $1,680,000

2346 $485,000 $845,000 $500,000 $1,830,000

2387 $495,000 $835,000 $600,000 $1,930,000

2986 $750,000 $3,960,000 $0 $4,710,000

3178 $460,000 $618,000 $450,000 $1,528,000

3199 $500,000 $600,000 $500,000 $1,600,000

3348 $650,000 $1,525,000 $0 $2,175,000

3774 $485,000 $1,015,000 $200,000 $1,700,000

4894 $495,000 $2,730,000 $0 $3,225,000

5021 $600,000 $4,250,000 $1,000,000 $5,850,000

5046 $475,000 $480,000 $320,000 $1,275,000

5555 $750,000 $2,840,000 $1,750,000 $5,340,000

5697 $750,000 $2,410,000 $1,550,000 $4,710,000

6386 $490,000 $1,137,000 $0 $1,627,000

6524 $495,000 $700,000 $555,000 $1,750,000

7459 $750,000 $2,825,000 $1,750,000 $5,325,000

7537 $600,000 $1,400,000 $1,000,000 $3,000,000

9074 $425,000 $312,500 $325,000 $1,062,500

9635 $500,000 $1,150,000 $750,000 $2,400,000

9859 $525,000 $545,000 $475,000 $1,545,000

Comparison of 2013 compensation to prior year compensation for the employees listed above

• Overall: Overall cash decreased $6.6 million, or 30.7%, and total direct compensation decreased $3.0 million, or 4.1%, from 2012.

• The 14 employees remaining in the Top 25 from 2012: Cash salaries remained the same and total direct compensation increased 

$3.0 million, or 6.1%, from 2012. (This comparison is to target total direct compensation for 2012; the amount of long-term 

restricted stock actually awarded may have been lower than the target amount.)

• The 10 employees new to the Top 25 in 2013: Cash compensation decreased $6.6 million, or 57.0%, and total direct 

compensation decreased $6.0 million, or 26.1%, from 2012.

Note 1: The total number of Covered Employees may be fewer than 25 because of separations from service since April 1, 2013.

Source: Treasury. 2013 approved pay determination for the Top 25 executives at GM as of April 26, 2013.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 49

Report Number 14-001 September 24, 2014

Appendix D – Treasury 2014 Pay Determinations for Ally

EXHIBIT I

COVERED EMPLOYEES

2014 Compensation

Company Name: Ally Financial Inc.

Employee 

ID

Cash 

Sala

ry

Stock Salary

(Performance 

based: The 

stock vests at 

grant and is 

redeemable in 

three equal, 

annual 

installments 

beginning on the 

first anniversary 

of grant.)

Long-Term Restricted 

Stock (Performance 

based: Awarded based 

on achievement of 

objective performance 

goals. Generally vests 

after three years of 

service. Transferability 

dependent on TARP 

repayment.)

Total Direct

Compensation 

(Cash salary 

+ stock 

salary + 

long-term 

restricted 

stock.) 280677 $0 $9,500,000 $0 $9,500,000

101512 $500,000 $1,700,000 $0 $2,200,000

102645 $600,000 $4,587,357 $0 $5,187,357

105336 $500,000 $1,750,000 $0 $2,250,000

129881 $400,000 $1,041,000 $0 $1,441,000

141296 $491,000 $1,914,478 $0 $2,405,478

159613 $491,000 $1,850,000 $0 $2,341,000

178067 $450,000 $916,000 $0 $1,366,000

197253 $500,000 $3,142,944 $0 $3,642,944

265967 $600,000 $3,797,892 $0 $4,397,892

305789 $491,000 $1,300,000 $0 $1,791,000

353403 $416,000 $1,600,000 $0 $2,016,000

354392 $500,000 $1,674,943 $0 $2,174,943

380289 $391,000 $1,500,000 $0 $1,891,000

391076 $500,000 $2,100,000 $0 $2,600,000

398005 $450,000 $1,420,000 $0 $1,870,000

491397 $391,000 $1,050,000 $0 $1,441,000

513416 $491,000 $1,830,000 $0 $2,321,000

546145 $591,000 $3,400,000 $0 $3,991,000

567303 $500,000 $2,300,000 $0 $2,800,000

673894 $490,988 $1,300,012 $0 $1,791,000

725547 $500,000 $2,300,000 $0 $2,800,000

921597 $500,000 $1,649,872 $0 $2,149,872

931656 $491,000 $2,019,873 $0 $2,510,873

.Comparison of 2014 compensation to prior year compensation for the employees listed above

• Overall: Overall cash decreased $3.8 million or 25.2% and total direct compensation decreased $3.3

million or 4.7%.

• The 18 executives remaining in the top 25 from 2013: Cash salaries remained the same and total direct

compensation increased $150,000 or 0.27% from 2013. (This comparison is to target total direct compensation

for 2013.)

• The six executives new to the top 25 in 2013: Cash compensation decreased $3.8 million or 58.1% and

total direct compensation decreased $3.4 million or 24.8% from 2013.

Note 1: The total number of Covered Employees may be less than 25 because of separations from service since January 1, 2014.

Note 2: Redemption of stock salary awarded to the CEO will be as described above. Redemption of stock salary awarded to

other Covered Employees will be in three installments as described in the Determination Memorandum.

Source: Treasury. 2014 approved pay determination for the Top 25 executives at Ally as of April 2, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 50

Report Number 14-001 September 24, 2014

Appendix E – OSM-Approved Total Pay over Market 

Medians in 2013 

Source: SIGTARP analysis of OSM’s 2013 determination memorandums and company proposals.

OSM-APPROVED TOTAL PAY OVER MARKET MEDIANS IN 2013

Employee 

ID

Number

Company 

 Name

Market Median

Total Pay

in 2013

OSM-Approved 

Total Pay

in 2013

Amount of OSMApproved Total Pay 

over the Median

682168 Ally $2,960,000 $5,624,828 $2,664,828

102645 Ally $3,455,000 $5,187,357 1,732,357

265967 Ally $2,672,000 $4,397,892 1,725,892

280677 Ally $8,152,000 $9,500,000 1,348,000

391076 Ally $1,381,000 $2,600,000 1,219,000

542135 Ally $1,616,000 $2,800,000 1,184,000

931656 Ally $1,338,000 $2,510,873 1,172,873

105336 Ally $1,096,000 $2,250,000 1,154,000

197253 Ally $2,505,000 $3,642,944 1,137,944

104428 Ally $1,616,000 $2,741,000 1,125,000

141296 Ally $1,381,000 $2,405,478 1,024,478

 7537 GM $2,094,000 $3,000,000 906,000

101512 Ally $1,361,000 $2,200,000 839,000

 2387 GM $1,189,000 $1,930,000 741,000

707713 Ally $2,271,000 $3,000,000 729,000

 1565 GM $1,094,000 $1,680,000 586,000

380289 Ally $1,355,000 $1,891,000 536,000

513416 Ally $1,810,000 $2,321,000 511,000

 6524 GM $1,353,000 $1,750,000 397,000

 3774 GM $1,335,400 $1,700,000 364,600

 3178 GM $1,195,000 $1,528,000 333,000

 0230 GM $1,675,000 $2,000,000 325,000

 1223 GM $1,327,600 $1,636,000 308,400

546145 Ally $3,765,000 $3,991,000 226,000

 5046 GM $1,054,100 $1,275,000 220,900

353403 Ally $1,833,000 $2,016,000 183,000

 9074 GM $932,000 $1,062,500 130,500

398005 Ally $1,833,000 $1,870,000 37,000

 4894 GM $3,199,000 $3,225,000 26,000

 0094 GM $3,119,800 $3,137,500 17,700

 Total $22,905,472
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 51

Report Number 14-001 September 24, 2014

Appendix F – Status on Each of SIGTARP’s Seven

Recommendations

SIGTARP’s Recommendation Status on Each of SIGTARP’s 

Recommendations

1. To ensure that the office of the Special Master for 

TARP Executive Compensation consistently grants 

exceptions to the $500,000 cash salary cap, the 

Office of the Special Master should substantiate 

each exception requested and whether the requests 

demonstrate or fail to demonstrate “good cause.”

Not Implemented. While Treasury’s 

documentation of granting these cash salaries 

has improved in that it includes some 

additional information beyond the company’s 

assertions, that information is primarily 

market data that the company provides. The 

recommendation was not to document better, 

but instead to “substantiate,” which requires 

some criteria for granting exceptions as well 

as independent analysis beyond the company’s 

assertions. Treasury’s policy and procedures 

do not contain any criteria for approving cash 

salaries exceeding $500,000 or any discussion 

of any analysis by Treasury. 

2. The Office of the Special Master should better 

document its use of market data in its calculations. 

At a minimum, the Office of the Special Master 

should prospectively document which companies 

and employees are used as comparisons in its 

analysis of the 50th percentile of the market, and it 

should also maintain records and data so that the 

relationship between its determinations and 

benchmarks is clearly understood.

Implemented. In 2012, Treasury began 

retaining records of the market data provided 

by the company and a description of how it 

validates the data.

3. The Office of the Special Master should develop 

more robust policies, procedures, or guidelines to 

help ensure that its pay determination process and 

its decisions are evenhanded. These measures will 

improve transparency and help the Office of the 

Special Master consistently apply the Interim Final 

Rule principles of “appropriate allocation,” 

“performance-based compensation,” and 

“comparable structures and payments.”

Not Implemented. Although Treasury created 

a written policy and procedures in June 2013, 

OSM’s policy only contains Treasury’s Rule 

and language from the statute, all of which

existed prior to OSM’s creation. Therefore, 

OSM has not created its own formal policies. 

OSM’s written procedures are merely a 

documentation of some of OSM’s existing 

practices and guidelines, but not others as 

contained in the pay determination letters, and 

were not a new development of robust 

policies, procedures, or guidelines. They do 

not establish meaningful criteria Treasury can 

follow for approving cash salaries exceeding 

$500,000, pay exceeding market medians, pay 

raises, or the use of long-term restricted stock.

4. Each year, Treasury should reevaluate total 

compensation for those employees at TARP 

exceptional assistance companies remaining in the 

Top 25 from the prior year, including determining 

whether to reduce total compensation.

Not Implemented. Treasury’s new procedures 

state that OSM may reduce pay; however, 

OSM did not address any guidelines or criteria 

that it would consider in doing so. 
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 52

Report Number 14-001 September 24, 2014

5. To ensure that Treasury effectively applies 

guidelines aimed at curbing excessive pay and 

reducing risk taking, Treasury should develop 

policies, procedures, and criteria for approving pay 

in excess of Treasury guidelines.

Not Implemented. Treasury has not 

established clear policies, procedures, and 

criteria for approving pay in excess of 

Treasury’s guidelines such as the 50th 

percentile, cash salaries greater than $500,000, 

or use of long-term restricted stock. 

6. Treasury should independently analyze whether 

good cause exists to award a Top 25 employee a 

pay raise or a cash salary over $500,000. To ensure 

that the Office of the Special Master has sufficient 

time to conduct this analysis, Treasury should allow 

OSM to work on setting Top 25 pay prior to OSM’s 

receiving the company pay proposals, which start 

the 60-day timeline.

Not Implemented. Treasury has not 

established criteria for awarding an employee 

a pay raise or a cash salary exceeding 

$500,000. Such criteria are important for 

independently analyzing the basis for 

awarding pay raises or cash salaries greater 

than $500,000 and ensuring consistency in 

decision making. Treasury’s documentation 

of its justification does not evidence 

independent analysis, but instead sets forth the 

company’s assertions and market data 

supplied by the company.

7. To be consistent with Treasury’s Interim Final Rule 

that the portion of performance-based 

compensation compared to total compensation 

should be greater for positions that exercise higher 

levels of responsibility, Treasury should return to 

using long-term restricted stock for employees, 

particularly senior employees such as CEOs.

Not Implemented. In 2013, Treasury allowed 

some GM employees not to have long-term 

restricted stock and effectively approved only 

5% of all Ally employees’ pay in long-term 

restricted stock and failed to consider 

positions and levels of authority on an 

individual basis, as called for by Treasury’s 

Rule. In 2014, Treasury eliminated long-term 

restricted stock for Ally employees.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 53

Report Number 14-001 September 24, 2014

Appendix G – Acronyms and Abbreviations

Acronym or Definition

Abbreviation

AIG American International Group, Inc.

AIGFP AIG Financial Products

Ally Ally Financial Inc. (formerly General Motors Acceptance Corporation, 

Inc.)

Chrysler Chrysler Holding LLC

Chrysler Financial Chrysler Financial Services Americas LLC 

CPI Consumer Price Index

GM General Motors Corporation (name changed from Corporation to 

Company after bankruptcy in 2009)

IFR TARP Standards for Compensation and Corporate Governance; 

Interim Final Rule (also “Treasury’s Rule”)

OSM Office of the Special Master for TARP Executive Compensation

the Recovery Act American Recovery and Reinvestment Act of 2009

SIGTARP Office of the Special Inspector General for the Troubled Asset Relief 

Program

Special Master Special Master for TARP Executive Compensation

TARP Troubled Asset Relief Program

Top 25 the five senior executive officers and the next 20 most highly 

compensated employees

Treasury U.S. Department of the Treasury
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 54

Report Number 14-001 September 24, 2014

Appendix H – Evaluation Team Members

This evaluation was conducted and the report was prepared under the direction of Bruce Gimbel,

Deputy Special Inspector General for Audit and Evaluation, Office of the Special Inspector General 

for the Troubled Asset Relief Program.

Staff members who conducted the evaluation and contributed to the report include Jenniffer Wilson, 

Craig Meklir, Vonda Batts, Brandon Crowder, Michelle Mang, Janice Turner, and Cynthia Broome.
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 55

Report Number 14-001 September 24, 2014

Appendix I – Management Comments
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 56

Report Number 14-001 September 24, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 57

Report Number 14-001 September 24, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 58

Report Number 14-001 September 24, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 59

Report Number 14-001 September 24, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 60

Report Number 14-001 September 24, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 61

Report Number 14-001 September 24, 2014
TREASURY SIGNIFICANTLY LOOSENED EXECUTIVE PAY LIMITS RESULTING IN EXCESSIVE PAY FOR TOP 25

EMPLOYEES AT GM AND ALLY (GMAC) WHEN THE COMPANIES WERE NOT REPAYING TARP IN FULL AND TAXPAYERS

WERE SUFFERING BILLIONS OF DOLLARS IN LOSSES 62

Report Number 14-001 September 24, 2014
SIGTARP Hotline

If you are aware of fraud, waste, abuse, mismanagement, or misrepresentations associated with the Troubled 

Asset Relief Program, please contact the SIGTARP Hotline.

By UOnline FormU: Uwww.SIGTARP.govU By Phone: Call toll free: (877) SIG-2009

By Fax: (202) 622-4559

By Mail: Hotline: Office of the Special Inspector General

for the Troubled Asset Relief Program

1801 L Street., NW, 3rd Floor

Washington, D.C. 20220

Press Inquiries

If you have any inquiries, please contact our Press Office:

Troy Gravitt

Director of Communications

Troy.Gravitt@treasury.gov

202-927-8940

Legislative Affairs

For Congressional inquiries, please contact our Legislative Affairs Office:

Joseph Cwiklinski

Director of Legislative Affairs

Joseph.Cwiklinski@treasury.gov

202-927-9159

Obtaining Copies of Testimony and Reports

To obtain copies of testimony and reports, please log on to our website at Uwww.SIGTARP.govU.