DEPARTMENT OF THE TREASURY WASHINGTON, D.C. 20220 

April 8, 2011 

Mr. James J. Duffy 

Chief Human Resources Officer 

Ally Financial Inc. 

1177 Avenue of the Americas 

New York, NY 10036 

Re: Proposed Compensation Structures for Certain Executive Officers 

and Most Highly Compensated Employees (“Covered Employees 26 – 100”) 

Dear Mr. Duffy: 

Pursuant to the Department of the Treasury’s Interim Final Rule on TARP Standards for 

Compensation and Corporate Governance (the “Rule”),1

 the Office of the Special Master has completed 

its review of the 2011 compensation submission by Ally Financial Inc. (“Ally” or the “Company”), on 

behalf of employees who are either executive officers of Ally or one of Ally’s 100 most highly 

compensated employees, excluding those employees subject to Section 30.10 of the Rule (“Covered 

Employees 26 – 100” or “Covered Employees”). 

The Office of the Special Master’s compensation reviews for Covered Employees 26 – 100 differ 

from the reviews of Ally’s “top 25” employees, which addressed individual “amounts payable” to those 

employees, 31 C.F.R. § 30.16(a)(3)(i). For Covered Employees 26 – 100, the Rule does not require 

individual payment determinations; instead, the Office of the Special Master must determine only whether 

the proposed compensation structures “will or may result in payments that are inconsistent with the 

purposes of Section 111 of EESA or TARP, or are otherwise contrary to the public interest” (as applied to 

Covered Employees 26 – 100 of Ally, the “public interest standard”). Id. § 30.16(a)(3)(ii). 

On December 11, 2009, and April 16, 2010, the Office of the Special Master issued 

determinations relating to compensation structures for Ally’s 2009 and 2010 Covered Employees 26 – 

100, respectively (the “Prior Determinations”). The Prior Determinations were informed by a number of 

considerations, including each of the six principles (the “principles”) articulated in the Rule: avoid 

incentives to take excessive risk, maximize the company’s ability to repay the taxpayer, appropriately 

allocate the components of compensation, use performance-based compensation, employ pay structures 

and amounts that are consistent with those at comparable entities, and base pay on the employee’s 

contribution to the value of the TARP recipient enterprise. Id. § 30.16(b)(1). The Office of the Special 

Master has concluded that these principles must continue to apply in 2011. 

 

1

 The Interim Final Rule and all determination letters issued by the Office of the Special Master are available at 

www.financialstability.gov (click on “About Financial Stability”, then click on “Plan”, then scroll down to the 

second-to-last link and click on “Executive Compensation Guidance”). 
2 

In order to apply the principles and ensure that the compensation structures for Ally’s Covered 

Employees 26-100 satisfy the public interest standard, the Office of the Special Master has developed 

certain terms and conditions relating to the components and the allocation of compensation for Covered 

Employees that must be satisfied. These terms and conditions emphasize allocating significant portions 

of compensation to long-term structures tied to Ally’s overall value, using structures that are 

performance-based and easily understood by shareholders, and protecting the Company’s ability to 

remain a competitive enterprise and ultimately repay the taxpayers. 

The Office of the Special Master has determined that compensation structures that satisfy the terms 

and conditions described in Annex A are consistent with the public interest standard. Ally’s proposed 

compensation structures, with minor modifications, are consistent with these terms and conditions, which 

generally require that: 

 Compensation may be provided in three primary components: cash salary, stock salary, and 

incentive compensation. The amounts and conditions of the components for each Covered 

Employee will be determined by Ally’s compensation committee. 

 A significant portion of compensation must be performance-based. Fixed compensation must be 

limited to 40% of total direct compensation payable and consist only of cash salaries and stock 

salaries at levels sufficient to attract and retain employees and provide a reasonable level of 

liquidity. Total direct compensation payable can be established by individual or by reference to 

the total direct compensation payable to a group of Covered Employees. Cash salaries should not 

exceed $500,000 per year, except in exceptional cases for good cause shown, as certified by the 

Company’s independent compensation committee. 

 Compensation must emphasize long-term results. Payment and transferability of at least 50% of 

any incentive payment to a Covered Employee must be deferred for at least three years. In 

addition, at least 50% of all incentives must be in the form of equity in the Company. Finally, if 

total cash compensation payable to a Covered Employees is greater than $500,000, at least 50% 

of all cash incentive awards must be deferred for a minimum period of one year. 

 Incentive payments may be made if—and only if—the payments are appropriate in light of Ally’s 

overall circumstances and the particular Covered Employee achieves objective performance 

metrics. The total value of all incentive compensation payments cannot exceed a specified 

percentage of the company’s eligible earnings, to be determined by the compensation committee. 

Incentive payments must be subject to “clawback” if the performance assessment resulting in the 

compensation is later discovered to be inaccurate. 

In addition, compensation structures for Covered Employees 26 – 100 continue to be subject to the 

additional limitations on perquisites, severance benefits, hedging transactions, tax “gross-ups” and 

supplemental executive retirement plans described in Annex A. 

The Office of the Special Master’s determinations are limited to the compensation structures 

described in Annex A, and shall not be relied upon with respect to any other employee. The 

determinations have relied upon, and are qualified in their entirety by, the accuracy of the materials 

submitted by Ally to the Office of the Special Master, and the absence of any material misstatement or 

omission in such materials. Pursuant to the Rule, Ally may, within 30 days of the date hereof, request in 

 

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ANNEX A 

APPROVED 2011 COMPENSATION STRUCTURES 

This Annex sets forth terms and conditions for the 2011 compensation structures for Ally’s 2011 

Covered Employees 26 – 100. For the avoidance of doubt, if the compensation structure for a Covered 

Employee fits within the $500,000 “safe harbor” exemption set forth in Section 30.16(a)(3)(ii) of the 

Rule, the Office of the Special Master’s approval is not required for that employee’s compensation 

structure and the terms and conditions specified below do not apply. Capitalized terms used in this 

Annex have the meaning given to them in the preceding letter. To the extent that Ally’s proposed 

structures do not satisfy the principles and these terms and conditions, Ally must make such modifications 

as are necessary to comply with such principles and terms and conditions. 

1. Primary Components of Compensation 

 Cash salary. Covered Employees should not receive cash salaries in excess of $500,000, other 

than in exceptional circumstances for good cause shown. Any such exceptions must be 

individually certified to the Office of the Special Master by Ally’s compensation committee, 

which is composed solely of independent directors. 

 Stock salary. Stock salary must be determined as a dollar amount through the date salary is 

earned, be accrued at the same time or times as the salary would otherwise be paid in cash, and 

vest immediately upon grant, with the number of shares or units based on the fair market value on 

the date of grant. Whether a grant or payment that is labeled stock salary is salary or a bonus for 

purposes of the Rule is determined based on all the facts and circumstances. 

 Incentive compensation. Under any incentive compensation structure, payments to a Covered 

Employee must be conditioned upon achievement of objective performance criteria (other than 

continued service), with such achievement to be assessed and certified by the compensation 

committee. Performance criteria must be developed by the compensation committee and may be 

reviewed by the Office of the Special Master. The aggregate amount of incentives paid to 

Covered Employees for performance achieved only in 2011 may not exceed a specified 

percentage of Ally’s eligible earnings. The amount and calculation of such eligible earnings will 

be determined by the compensation committee and may be reviewed by the Office of the Special 

Master.

2. Allocation Rules 

 Application of allocation rules. The allocation rules apply to each Covered Employee’s 2011 

“total direct compensation payable,” which is equal to the sum of the amounts potentially payable 

to a Covered Employee (1) in 2011 cash salary, (2) in 2011 stock salary, or (3) under 2011 

incentive plans. For purposes of these determinations, 2011 incentive plans are plans for which 

incentives are earned (a) solely with respect to 2011, and (b) under a multi-year incentive plan 

established in 2011. Compliance with the allocation rules is to be assessed based on a Covered 

Employee’s total direct compensation payable as designed and established in 2011, assuming that 

the target level of achievement under each incentive plan is reached. Total direct compensation 

payable can be established by individual or by reference to the total direct compensation payable 

to a group of Covered Employees. 

 Cash Salary and Stock Salary allocation. Compensation payable as cash salary and stock salary 

may constitute no more than 40% of the total direct compensation payable to each Covered 

Employee in 2011. 
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 Incentive allocation. A minimum of 60% of the total direct compensation payable to each 

Covered Employee in 2011 must be allocated to performance-based incentive awards assuming 

that the target level of company, business unit and individual achievement is reached. No 

payment or equity award under a 2011 incentive plan may be made prior to the conclusion of the 

applicable performance period. 

 Long-term allocation. Payment and transferability of least 50% of all performancebased incentive awards must be deferred for at least a three-year period. Pro rata release 

of such amounts is permitted, allowing two-thirds of such amount to become payable and 

transferable not earlier than the second anniversary of the date of the award and the last 

third of such amount to become payable and transferable on the third anniversary of the 

award. In addition, if total cash compensation payable to a Covered Employee in 2011 is 

greater than $500,000, at least 50% of all performance-based incentive awards payable in 

the form of cash may not be paid prior to the first anniversary of grant. 

 Equity allocation. At least 50% of all performance-based incentive awards must be 

delivered in the form of equity in the Company. 

 Satisfying incentive allocations. The aggregate 2011 performance-based incentives 

actually paid or awarded to each Covered Employee must satisfy the above long-term and 

equity allocation requirements. If several incentive plans are in existence, this can be 

achieved either (1) by ensuring that the aggregate cash paid and equity awarded to a 

Covered Employee pursuant to each incentive plan separately satisfies the long-term and 

equity allocation requirements, or (2) by having one incentive compensation target 

package that complies with the allocation requirements and giving each Covered 

Employee a “scorecard” consisting of multiple goals; achievement against those goals 

would be evaluated resulting in an overall score, which would determine the percentage 

of the target that the Covered Employee had earned.

3. Additional Terms and Conditions 

 Stock compensation generally. For purposes of these determinations, “stock” compensation 

includes Ally common stock or common stock units. Notwithstanding the transferability 

restrictions otherwise applicable to any stock compensation, (1) an amount of stock sufficient to 

cover an employee’s tax withholding obligations may become immediately transferable to the 

extent necessary to satisfy the employee’s obligations, and (2) to the extent permitted by the Rule, 

stock may become immediately transferable upon an employee’s death or separation from service 

resulting from disability, as defined in the Company’s broad-based long-term disability plan. 

 Clawbacks and hedging. Any incentive payment must be subject to “clawback” if the payment 

or the amount thereof was based on materially inaccurate financial statements (which term 

includes, but is not limited to, statements of earnings, revenues, or gains) or any other materially 

inaccurate performance metric criteria, or if the Covered Employee is terminated due to 

misconduct that occurred during the period the incentive was earned. In addition, the 

compensation structure for each Covered Employee must prohibit the employee from engaging in 

any hedging, derivative or similar transaction with respect to Company stock that would 

undermine the long-term performance incentives created by the compensation structures set forth 

in this Annex.

 Employees entering the “top 25”. If Ally reasonably concludes that a Covered Employee may 

become one of the “top 25” employees in 2012, the compensation structure for that Covered 
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Employee will be subject to the following additional terms and conditions to assure compliance 

with pertinent statutory and regulatory requirements. Any payment under a 2009, 2010, or 2011 

incentive plan that would be payable to the Covered Employee in cash in the first quarter of 2012 

consistent with the terms of this Annex, or any previous Annex relating to 2009 or 2010, may be 

paid on or before December 31, 2011. In addition, notwithstanding the other requirements of the 

related Annex, any incentive compensation for performance in 2009, 2010, or 2011 may be paid 

to the Covered Employee in the form of Ally common stock (but not stock units) that vests and is 

delivered on or before December 31, 2011, provided that the transferability of such stock shall be 

consistent with the structural principles of the related Annex. Finally, notwithstanding the other 

requirements of this Annex, up to one-third of the Covered Employee’s “annual compensation” 

for 2011 may be paid in the form of “long-term restricted stock,” as those terms are defined in the 

Rule. For the avoidance of doubt, all such payments continue to be subject to the applicable 

provisions in the related Annex regarding clawbacks and hedging. 

 Severance. No 2011 compensation structure may establish the right to a “golden parachute” 

payment (as defined in the Rule) or permit an increase in the amount of such a payment under an 

already-existing arrangement.

4. Other Components of Compensation 

 Tax gross-ups. Ally is prohibited from providing (formally or informally) tax gross-ups to any of 

the Covered Employees, in the same manner as the gross-up prohibition applies to “top 25” 

employees under the Rule. 

 Other compensation and perquisites. No more than $25,000 in total other compensation and 

perquisites, as defined by pertinent SEC regulations, may be provided to any Covered Employee, 

absent exceptional circumstances for good cause shown. Payments to Covered Employees under 

expatriate arrangements, not to exceed $350,000 per employee (excluding “tax equalization 

agreements” as defined in the Rule), are excluded from the limitation in the foregoing sentence. 

 Supplemental executive retirement plans and non-qualified deferred compensation plans. No 

amounts may be accrued under supplemental executive retirement plans, and no Company 

contributions may be made to other “non-qualified deferred compensation” plans, as defined by 

pertinent SEC regulations, for any Covered Employee for 2011. For the avoidance of doubt, the 

foregoing limitation does not (1) apply to employee-funded elective deferral arrangements, or (2) 

preclude continuing recognition of age and service credit for Company employees for the purpose 

of vesting in previously accrued benefits under any plans referred to in this paragraph. 

 Qualified plans. For the avoidance of doubt, the Office of the Special Master has determined that 

participation by the Covered Employees in broad-based, tax-qualified retirement and health and 

welfare plans is consistent with the public interest standard, and amounts contributed to or 

payable under such plans are not counted against the $25,000 limit on other compensation and 

perquisites.