Office of the Special Master for TARP Executive Compensation 

FINAL REPORT OF SPECIAL MASTER KENNETH R. FEINBERG

September 10, 2010
i 

TABLE OF CONTENTS 

PREFACE............................................................................................................................. iii

INTRODUCTION ................................................................................................................ iv

I. STATUTE AND REGULATIONS ............................................................................... 1

A. Initial Statutory and Regulatory Requirements ........................................................ 1

B. The Recovery Act and Subsequent Treasury Standards ........................................... 1

C. The Interim Final Rule on TARP Standards for Compensation and Corporate 

Governance ............................................................................................................... 2

II. THE OFFICE OF THE SPECIAL MASTER FOR TARP EXECUTIVE 

COMPENSATION ........................................................................................................ 4

A. Authority of the Office ............................................................................................. 4

1. Jurisdiction Over Exceptional Assistance Recipients ......................................... 4

2. Interpretative Authority ...................................................................................... 6

3. The Section 111(f) Look Back Review .............................................................. 6

B. Organization and Administration of the Office ........................................................ 6

1. Staffing ............................................................................................................... 6

2. Coordination with Treasury and Other Federal Officials.................................... 6

3. Communication with Exceptional Assistance Recipients and Other TARP 

Recipients ........................................................................................................... 7

4. Oversight ............................................................................................................ 7

III. COMPENSATION DETERMINATIONS FOR EXCEPTIONAL ASSISTANCE 

RECIPIENTS ................................................................................................................ 8

A. Determination Process .............................................................................................. 8

1. Communication................................................................................................... 8

2. Diligence and Analysis ....................................................................................... 8

3. Drafting and Release of Determinations ............................................................. 9

B. Recurrent Standards in Determinations .................................................................... 9

1. Strict Limits on Guaranteed Cash Compensation ............................................... 9

2. Achievement of Objective Performance Goals ................................................... 9

3. Long-term Structures ........................................................................................ 10

4. Minimization of Indirect and Ancillary Compensation .................................... 10

C. Determinations ....................................................................................................... 10

1. Top 25 Determinations ..................................................................................... 10
ii 

2. Covered Employees 26–100 Determinations .................................................... 10

3. Supplemental Determinations............................................................................ 11

IV. SECTION 111(f) LOOK BACK REVIEW .................................................................. 12

A. Basis of Review ....................................................................................................... 12

B. Data Request ........................................................................................................... 12

C. Data Analysis .......................................................................................................... 12

D. Findings ................................................................................................................... 13

E. Proposed Policy ....................................................................................................... 13

V. OBSERVATIONS AND RECOMMENDATIONS ..................................................... 15

NOTES ................................................................................................................................. 16

GLOSSARY OF DEFINED TERMS .................................................................................. 23

EXHIBITS ............................................................................................................................ 25

iv 

INTRODUCTION 

As the Special Master for TARP Executive Compensation from the establishment 

of the Office of the Special Master on June 15, 2009, through September 10, 2010, I 

respectfully submit this report detailing the work of the Office during the period of my 

appointment. As an official matter, my duties as Special Master do not require me to 

provide a formal report upon my departure; however, I concluded that such a report is 

warranted. Two factors in particular informed my decision. First, executive compensation 

practices, especially at firms that received taxpayer assistance, are a continuing concern of 

the Treasury Department, other government officials and the public at large. Second, 

accountability and transparency regarding this Office have had the highest priority during 

my tenure. The following document is intended to serve those same two considerations, 

with a brief and straightforward description of the Office and its activities to date. 

Since my appointment as Special Master, the executive compensation landscape 

has changed significantly. While the Office focused on its discrete responsibilities, a much 

broader policy initiative was moving forward. Last September, G-20 leaders confirmed that 

compensation practices in the financial sector both reflected and encouraged excessive risktaking, and endorsed standards intended to align compensation practices with long-term 

value creation and financial stability. These standards are being implemented worldwide. 

In the United States, the Federal Reserve and other federal banking regulators 

issued guiding principles on how incentive compensation at banks should be designed to 

protect safety and soundness, and committed to ensuring that banks adopt these principles. 

The SEC enhanced existing compensation disclosure requirements. The Wall Street 

Reform law requires public companies to give shareholders a “say on pay” vote and 

strengthens compensation committees’ independence. Taken together, these efforts 

demonstrate the resolve to address compensation issues that contributed to the financial 

crisis, and the significant progress made to date. 

Executive pay practices, however, present difficulties that range beyond incentive 

plan design and corporate governance, including the profound difference in perspective on 

executive pay practices between some financial institutions and many of the taxpayers 

whose dollars rescued our economy and financial system. To our great benefit, the 

Treasury rules that created the Office of the Special Master anticipated the range of 

difficulties we would encounter, and provided authority to confront them as well as 

principles for doing so. Given this authority and guidance, I believe an important measure 

of the Office’s performance is its willingness to confront the full range of difficulties, from 

the technical challenge of creating sound incentive programs, to addressing certain 

widespread perceptions of fairness. 

The ultimate effects of the Office’s extraordinary oversight will not be known for 

some time. At this point, I am pleased to report that the program is a success. Of the seven 

firms initially subject to the Office’s jurisdiction, two have completed repayment to the 

taxpayers and three more have begun to do so—in one case fully returning the 

“exceptional” assistance that invoked my purview. Four firms remain in the program, but I 

am encouraged by their record of retaining top employees and adding outside talent, and 

hopeful for their eventual repayment. 
v 

This report has five parts. Part I provides the legislative and regulatory 

background and framework surrounding the Office. Part II outlines the Office’s duties, 

authority and organization. Part III describes the compensation determinations regarding 

firms that received exceptional taxpayer assistance. Part IV describes the review of 

payments made to Top 25 executives at all TARP recipients before the Recovery Act 

introduced tighter standards. Part V includes my observations and recommendations in 

light of my experience as Special Master. Finally, the report has a substantial collection of 

exhibits, including all the compensation determinations to date. 
1 

I. STATUTE AND REGULATIONS 

A. Initial Statutory and Regulatory Requirements

On October 3, 2008, the Emergency Economic Stabilization Act of 2008 became 

law.1

 Developed in response to the financial crisis facing the nation, EESA provided 

immediate authority and facilities that Treasury could use to restore liquidity and stability 

to the financial system.2

 EESA authorized the Secretary to establish the Troubled Asset 

Relief Program to “purchase, and to make and fund commitments to purchase, troubled 

assets from any financial institution, on such terms and conditions as are determined by the 

Secretary, and in accordance with this Act and policies and procedures developed and 

published by the Secretary.”3

EESA also directed the Secretary to require firms participating in TARP to meet 

appropriate standards for executive compensation and corporate governance.4

 The statute 

provided criteria, which required at least the following standards to apply while a firm was 

a TARP recipient:5

• Limits on compensation to exclude incentives for senior executive officers to 

take unnecessary and excessive risks that threaten their firm’s value.6

• A “clawback” provision to permit the recovery of bonuses paid to senior 

executive officers based on earning statements or other criteria later proven to 

be materially inaccurate.7

• Prohibition on firms making golden parachute payments to senior executive 

officers.8

On October 20, 2008, Treasury issued an interim final rule implementing the 

EESA standards for participants in the Capital Purchase Program, the source of funds for 

most of the firms receiving taxpayer assistance.9

 On February 4, 2009, Treasury announced 

revised guidelines, with additional corporate governance requirements and restrictions on 

pay structures.10

B. The Recovery Act and Subsequent Treasury Standards

Prior to the implementation of the February 4, 2009 guidelines, Congress passed 

the American Recovery and Reinvestment Act of 2009, which the President signed into law 

on February 17, 2009.11 The Recovery Act amended EESA to require more stringent 

governance and pay standards. The amended standards included all the initial EESA 

requirements and the following additions: 

• Extension of the “clawback” requirement to a firm’s entire Top 25.12

• Extension of the prohibition on golden parachute payments to the Top 10,13

and clarification that the prohibition covers all payments due to a departure 

from employment, not just those above a certain amount.14
2 

• Prohibition on the payment or accrual of any bonus, retention award, or 

incentive compensation to certain highly compensated employees, except for 

limited incentives paid in “long-term restricted stock” 15 or under existing, 

binding contracts.16 The number of employees covered by the prohibition 

ranges from one to 25 depending on the amount of TARP assistance 

received.17

• Prohibition of compensation plans that encourage manipulation of reported 

earnings to enhance the compensation of employees.18

• Establishment of a compensation committee composed entirely of 

independent directors.19 The committee must conduct a risk-assessment of 

compensation plans at least every six months.20

• Establishment of a company-wide policy regarding excessive or luxury 

expenditures.21

• An annual, non-binding “say on pay” shareholder vote regarding 

compensation required to be disclosed under SEC rules.22

• Annual certifications of compliance with the Recovery Act standards, to be 

provided by the chief executive officer and chief financial officer of a firm.23

Finally, in addition to the prospective requirements for TARP recipients, the 

Recovery Act also required the Secretary to conduct a Look Back Review of bonuses, 

retention awards, and other compensation paid to each TARP recipient’s Top 25 before the 

introduction of the additional requirements, to determine whether any payments were 

inconsistent with the purpose of EESA or TARP, or otherwise contrary to the public 

interest.24 This standard is often referred to as the Public Interest Standard. For any 

payment determined to be in such a category, the Secretary must “seek to negotiate with the 

TARP recipient and subject employee for appropriate reimbursements to the Federal 

Government.”25

C. The Interim Final Rule on TARP Standards for Compensation and Corporate 

Governance

The Recovery Act also directed the Secretary to issue regulations implementing its 

compensation and corporate governance requirements.26 On June 10, 2009, Treasury 

announced the Interim Final Rule on TARP Standards for Compensation and Corporate 

Governance,27 which consolidated and superseded all prior guidance on compensation and 

corporate governance for TARP recipients.28 In addition to the specific requirements 

provided by the Recovery Act, the Rule requires TARP recipients to meet the following 

standards:29

• Prohibition on paying tax “gross-ups” to Top 25 executives.30 Tax “grossups” are payments designed to reduce or eliminate the tax burden on an 

executives relating to particular compensation and benefits arrangements. 

• Disclosure of perquisites exceeding $25,000 for certain employees.31
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• Disclosure of whether the company or its compensation committee engaged a 

compensation consultant.32

• For Exceptional Assistance Recipients, approval by the Special Master of 

certain compensation structures and payments to certain executives.33

Along with releasing the Rule, the Secretary announced the appointment of 

Kenneth R. Feinberg as Special Master.34 The authorities and responsibilities of the Special 

Master are described in detail below. 
4 

II. THE OFFICE OF THE SPECIAL MASTER FOR TARP EXECUTIVE 

COMPENSATION 

A. Authority of the Office

The Special Master is appointed by the Secretary, and may be removed by the 

Secretary with or without notice, without cause, and prior to the naming of any successor.35 

The Special Master has three primary responsibilities: (1) reviewing and approving 

compensation payments and structures of executives at Exceptional Assistance 

Recipients;36 (2) interpreting the executive compensation and corporate governance 

provisions of the Rule and related guidance;37 and (3) conducting the Look Back Review.38 

The authority of the Special Master to review, interpret and approve is limited to these 

areas, and does not extend to any other aspects of EESA or TARP, or to employees of 

TARP recipients other than those specifically identified in the statute and regulations.39

1. Jurisdiction Over Exceptional Assistance Recipients 

The Rule identifies several TARP programs that provide “exceptional” taxpayer 

support.40 Firms receiving financial assistance under one of these programs are required to 

obtain Special Master approval regarding certain compensation structures and payments to 

certain executives.41 Initially, the firms receiving assistance under these programs, and 

therefore subject to Special Master jurisdiction, were: AIG, Bank of America, Chrysler, 

Chrysler Financial, Citigroup, General Motors and GMAC (now known as Ally 

Financial).42 As a result of repayments by three of these firms,43 as of August 2, 2009, the 

firms required to obtain Special Master approvals are AIG, Ally Financial, Chrysler and 

General Motors. 

Under the Rule, Exceptional Assistance Recipients must obtain Special Master 

approval for the compensation structures and payments to Top 25 executives.44 Special 

Master approval is also required for the compensation structures—but not individual 

compensation payments—of Covered Employees 26–100. 45 The same fundamental 

standard is applied in Top 25 and Covered Employees 26–100 reviews: the Special Master 

must determine whether a payment (or payment that may result from a compensation 

structure) would be inconsistent with the purposes of Section 111 of EESA or TARP, or 

would otherwise be contrary to the public interest.46 Under the Rule, the Special Master 

determines consistency with this standard by applying six principles: 

• Risk. Compensation structures should avoid incentives that encourage 

employees to take unnecessary or excessive risks that could threaten the value 

of the company including incentives that reward employees for short-term or 

temporary increases in value or performance; or similar measures that may 

undercut the long-term value of the company. Compensation packages should 

be aligned with sound risk management.47

• Taxpayer Return. Compensation structures and amount payable should reflect 

the need for a firm to remain a competitive enterprise, to retain and recruit 

talented employees who will contribute to the recipient’s future success, so 

that the company will ultimately be able to repay its TARP obligations.48
5 

• Appropriate Allocation. Compensation structures should appropriately 

allocate the components of compensation such as salary and short-term and 

long-term performance incentives, as well as the extent to which 

compensation is provided in cash, equity, or other types of compensation such 

as executive pensions, or other benefits, or perquisites, based on the specific 

role of the employee and other relevant circumstances, including the nature 

and amount of current compensation, deferred compensation, or other 

compensation and benefits previously paid or awarded.49

• Performance-based Compensation. An appropriate portion of compensation 

should be performance-based over a relevant performance period. 

Performance-based compensation should be determined through tailored 

metrics that encompass individual performance and/or the performance of the 

company or a relevant business unit taking into consideration specific 

business objectives. Performance metrics may relate to employee compliance 

with relevant corporate policies. In addition, the likelihood of meeting the 

performance metrics should not be so great that the arrangement fails to 

provide an adequate incentive for the employee to perform, and performance 

metrics should be measurable, enforceable, and actually enforced if not met.50

• Comparable Structures and Payments. Compensation structures, and amounts 

payable where applicable, should be consistent with, and not excessive taking 

into account, compensation structures and amounts for persons in similar 

positions or roles at similar entities, including, as applicable, entities 

competing in the same markets and similarly situated entities that are 

financially distressed or that are contemplating or undergoing 

reorganization.51

• Employee Contribution to TARP Recipient Value. The compensation 

structure and amount payable should reflect the current or prospective 

contributions of an employee to the value of the company, taking into account 

multiple factors such as revenue production, specific expertise, compliance 

with company policy and regulation (including risk management), and 

corporate leadership, as well as the role the employee may have had with 

respect to any change in the financial health or competitive position of the 

recipient.52

The Rule provides discretion for the Special Master to determine the appropriate 

weight or relevance of a particular principle depending on the facts and circumstances 

surrounding the compensation structure or payment for a particular employee.53 To the 

extent two or more principles may appear inconsistent in a particular situation, the Special 

Master exercises his discretion in determining the relative weight to be accorded to each 

principle.54 The Special Master may also take into account other compensation structures 

and other compensation earned, accrued, or paid, including compensation structures and 

payments that are not subject to the restrictions of Section 111 of EESA. For example, in 

reaching a determination about a proposed, prospective arrangement, the Special Master 

may consider payments that will be made pursuant to an existing contract that the Special 

Master has no authority to restructure or cancel.55
6 

In certain circumstances, the Special Master’s authority over compensation 

structures and payments is limited. Compensation structures for Covered Employees 26–

100 that provide total annual compensation (other than long-term restricted stock) not 

exceeding $500,000 are automatically deemed to meet the Public Interest Standard.56 In 

addition, the Special Master has the discretion to limit the scope of his reviews based on 

factors such as the amount and type of payments, or the overall compensation earned by the 

employee during the relevant period.57

2. Interpretative Authority 

The Special Master is responsible for interpreting the executive compensation and 

corporate governance requirements of EESA, the Rule and any other applicable guidance as 

applied to particular facts and circumstances.58 The Special Master has authority to render 

advisory opinions regarding whether those requirements have or would be met in particular 

circumstances,59 as well as the authority to issue advisory opinions regarding whether the 

compensation structures or payments to employees of a TARP recipients are consistent with 

the Public Interest Standards.60

3. The Section 111(f) Look Back Review 

The Secretary delegated the responsibility and authority for administering the 

Look Back Review to the Special Master. The review requires application to Review 

Period payments of the same six principles underlying the Public Interest Standard,61 which 

are described in detail above (i.e., risk, taxpayer return, appropriate allocation, 

performance-based compensation, comparable structures and payments, and employee 

contribution to TARP recipient value). The Special Master had discretion to determine the 

scope of the review based on factors such as the payment amount, the type of payment, or 

the overall compensation earned by the employee during the relevant period, and the costs 

and benefits of renegotiation for a payment.62 The Rule also provided authority to collect 

information necessary to carry out the review from TARP recipients.63

B. Organization and Administration of the Office

1. Staffing 

The staff of the Office has consisted of Treasury employees and contractors 

detailed from the Office of Financial Stability. During the determination process for 

Exceptional Assistance Recipients described below, a team of approximately twelve 

worked for the Office on a full or part-time basis, including four executive compensation 

specialists and analysts, five attorneys, the Special Master, and managerial and 

administrative support staff. The Special Master also consulted two academic experts in the 

field of executive compensation: Lucian A. Bebchuk of Harvard Law School and Kevin J. 

Murphy of the University of Southern California’s Marshall School of Business. 

2. Coordination with Treasury and Other Federal Officials 

From time to time, the Office staff and the Special Master sought input from 

Treasury officials on a wide variety of matters, including firm-specific issues on which an 
7 

official might have particular expertise, guidance on broad departmental mission goals and 

program priorities, and his determinations. As circumstances warranted, the Office also 

consulted with staff members at the Federal Reserve, the Federal Reserve Bank of New 

York, and other agencies to discuss general matters of executive compensation policy and 

practice, and compensation considerations of specific Exceptional Assistance Recipients. 

Finally, the Special Master represented Treasury in consultations with the Federal Housing 

Finance Agency, which is charged with approving compensations arrangements for certain 

executives at Fannie Mae and Freddie Mac. 

3. Communication with Exceptional Assistance Recipients and Other TARP 

Recipients 

The Special Master and members of his staff regularly interact with Exceptional 

Assistance Recipients and other TARP recipients. These interactions range from formal inperson meetings with compensation committee members and senior executives of 

Exceptional Assistance Recipients to discuss proposed compensation structures, to informal 

telephone conversations with TARP recipients regarding the requirements of the Rule. 

4. Oversight 

A number of entities oversee TARP and programs established under TARP, 

including the Office of the Special Inspector General for the Troubled Asset Relief 

Program,64 the Financial Stability Oversight Board,65 the Congressional Oversight Panel,66

and the Government Accountability Office.67 The Office has contributed information about 

the compensation and corporate governance standards under TARP and the Special 

Master’s determinations to Office of Financial Stability’s responses to inquiries and reports 

for these oversight bodies, and met in person or by telephone to brief them on the Special 

Master program and determinations. The Special Master also appeared before Congress 

regarding his work on two occasions—before the House Committee on Oversight and 

Government Reform on October 28, 2009,68 and before the House Committee on Financial 

Services on February 25, 2010.69
8 

III. COMPENSATION DETERMINATIONS FOR EXCEPTIONAL ASSISTANCE 

RECIPIENTS 

A. Determination Process

The particular circumstances of Exceptional Assistance Recipients and individual 

employees drove the outcome of particular determinations, but the process leading to 

conclusions and determinations was consistent across the institutions and each round of Top 

25 and Covered Employees 26–100 determinations. Generally, the process involved three 

parallel work streams: communication, diligence and analysis, and drafting and release of 

determinations. 

1. Communication 

The first step in each round of determinations was communication with the 

Exceptional Assistance Recipients regarding the timing, anticipated steps for the upcoming 

process and early review of potential substantive concerns. Next, the Office officially 

requested data from each firm regarding the historical and proposed compensation 

arrangements of the applicable executives. After an initial review of a data submission, 

and, to the extent necessary, follow-up conversations and re-submissions, the Office 

provided formal notice that a firm’s submission was substantially complete, setting a 60-

day deadline for the issuance of a determination.70 Throughout the remainder of the 

process, staff of the Office maintained regular communication with the firms regarding both 

procedural matters and substantive concerns about proposed compensation structures and 

payments. 

In addition to communication with staff and advisers of the Exceptional Assistance 

Recipients, the Office from time to time consulted other government officials with expertise 

regarding a particular institution. Finally, with respect to the 2009 Top 25 and Covered 

Employees 26–100 determinations, the Office consulted with the academic experts 

identified above. 

2. Diligence and Analysis 

Preliminary issue-spotting and benchmarking of proposed compensation structures 

and payments began during initial communications with Exceptional Assistance Recipients 

regarding pending submissions. After receiving data submissions, Office staff working on 

a particular determination performed in-depth legal diligence, and market and historical 

analysis, of proposed and existing compensation arrangements of executives, particularly 

by reference to the Rule’s principles. Following this review, the Special Master was 

presented with an issues list for his consideration, often leading to an iterative process of 

discussions among the Special Master and Office staff, and follow-up conversations with 

the Exceptional Assistance Recipients to pose questions and counter-proposals. 

Based on the information submitted by the firms and the Office’s review and 

communications, and in light of the six principles set forth in the Rule, the Special Master 

would reach determinations. Following the initial round of determinations, the Office and 
9 

the Special Master realized significant benefit in having an established process and base of 

information. 

3. Drafting and Release of Determinations 

Compensation determinations are presented in memoranda, which describe the 

analysis and rationale informing the Special Master’s conclusions, as well as the technical 

requirements for approved structures. For Top 25 determinations, the memoranda also 

present the approved amounts potentially payable under the structures. All compensation 

determinations of the Special Master (including supplemental determinations) are available 

to the public via the Special Master’s website.71

B. Recurrent Standards in Determinations

The conclusions in the Special Master’s final compensation determinations are 

reached, as the case may be, on an employee-by-employee, group-by-group or companyby-company basis, and are heavily dependent on the facts and circumstances surrounding a 

particular conclusion. Each conclusion necessarily reflects the Special Master’s exercise of 

discretion and judgment in applying the Rule’s six principles to a particular situation; 

however, in the course of reviewing the wide variety of proposals submitted by the 

Exceptional Assistance Recipients, four key standards, based on the Rule’s principles, 

provided the groundwork for compensation structures and payments approved by the 

Special Master. Each of these standards is described below. 

1. Strict Limits on Guaranteed Cash Compensation 

The primary portion of an employee’s compensation package should be allocated 

to compensation structures with performance components.72 As a result, large amounts of 

fixed cash compensation are disfavored.73 The cash portion of an employee’s salary 

generally should not exceed $500,000, other than in exceptional circumstances for good 

cause shown. Additional salary should instead be composed of vested stock with extended 

holding requirements. 

Cash incentives (where permitted by the Rule) should not be guaranteed under any 

circumstances.74 Certain pre-existing incentive compensation arrangements include 

guaranteed minimum payments. Such arrangements provide the employee with little 

downside risk in the event of poor performance, but potentially unlimited gain in the event 

that substantial risk-taking leads to significant profits, which can create incentives to take 

unnecessary or excessive risks. Where possible such arrangements should be restructured, 

or, to the extent they cannot be restructured due to contractual obligations or other reasons, 

taken into account when making specific compensation determinations.75

2. Achievement of Objective Performance Goals 

Incentive compensation should be based on performance metrics that are 

measurable, enforceable, and actually enforced if not met.76 The company’s independent 

compensation committee must take an active role in both the design process of incentives 

and the review and measurement of achievement. 
10 

3. Long-term Structures 

A significant amount of compensation should reflect a company’s long-term 

performance and value, often using grants of company stock.77 In most circumstances a 

large proportion of compensation should be held or deferred for a period of at least three 

years.

78 In addition, the vesting of an employee’s right to a payment and the actual 

monetization or redemption of the payment should be partially or wholly separated. For 

example: Cash incentive payments should generally be delivered in multiple tranches and 

not as single lump sums, with subsequent tranches deferred for at least a year after payment 

of the initial tranche. Stock salary must generally be redeemable ratably over a period of 

years, and no portion of an executive’s stock salary should be redeemable in less than one 

year. 

4. Minimization of Indirect and Ancillary Compensation 

Compensation structures that are not aligned with shareholder and taxpayer 

interests in the firm should be minimized or eliminated. Executives’ opportunities for 

wealth creation should be married to the fortunes of the firm, not provided by compensation 

structures such as golden parachutes and supplemental retirement programs. In addition, 

executives should bear the burden of personal expenses; firms should not provide excessive 

perquisites or tax gross-ups. 

C. Determinations

1. Top 25 Determinations 

Determinations for Top 25 executives have been issued for 2009 and 2010. The 

first rulings for this group were released on October 22, 2009, and covered the initial seven 

Exceptional Assistance Recipients.79 Despite occurring late in the year, the structures and 

payments resulted in substantial reductions in cash and overall compensation for 2009 to 

the covered executives.80

The 2010 Top 25 determinations were released on March 23, 2010,81 and covered 

the five firms then receiving exceptional assistance. (Prior to the 2010 determinations, 

Bank of America fully repaid its obligations,82 and Citigroup repaid its exceptional 

assistance.)83 These determinations generally followed the precedents set by the October 

2009 Top 25 determinations, with refinements reflecting the benefit of additional 

experience and in light of changes to particular circumstances. A large majority—84%—of 

Top 25 executives covered by the 2009 determinations remained with the companies 

through the 2010 determinations. The cash and overall compensation of most executives 

new to the Top 25, who mostly filled slots created by employee departures prior to the 2009 

determinations, was reduced substantially from historical levels.84

2. Covered Employees 26–100 Determinations 

Determinations for Covered Employees 26–100 have been issued for 2009 and 

2010. Because the review of this group of employees addresses compensation structures 
11 

and not actual payments, the effect of the determinations on the overall amounts of 

compensation is not measurable by the Office of the Special Master. 

The initial determinations for this group were released on December 11, 2009, and 

covered five of the six firms then receiving exceptional assistance.85 (Prior to the issuance 

of these determinations, Bank of America fully repaid its obligations.)86 No determination 

was issued for Chrysler Financial because its entire Covered Employees 26–100 group fell 

within the Rule’s $500,000 “safe harbor,” which results in automatic approval of an 

executive’s compensation structure.87 Despite occurring near the end of the year, however, 

the determinations preceded “bonus season” for 2009. As a result, most incentive payments 

to covered employees were required to conform to the Special Master’s approved 

structures, with substantial allocation to stock-based and long-term structures.88

The 2010 Covered Employees 26–100 determinations were released on April 16, 

2010, and covered four of the five firms then receiving exceptional assistance. (Prior to the 

2010 determinations, Citigroup repaid the assistance it had been provided under an 

exceptional assistance program.)89 For 2010, no determination was issued for Chrysler 

because its entire Covered Employees 26–100 group fell within the safe harbor.90 These 

determinations closely followed the precedent of the December 2009 Covered Employees 

26–100 determinations.91

3. Supplemental Determinations 

In addition to the calendar year Top 25 and Covered Employees 26–100 

determinations, the Special Master from time to time issued “supplemental” 

determinations.92 These determinations were issued for three purposes: First, in response 

to proposals regarding the compensation structures and payments for new hires in roles that 

are subject to immediate Special Master jurisdiction.93 Second, to provide technical 

corrections to previous determinations or a response to a request for reconsideration.94 

Third, in response to a proposal to modify previously approved compensation structures.95
12 

IV. SECTION 111(f) LOOK BACK REVIEW 

A. Basis of Review

As described above, the Recovery Act mandated a review of prior compensation 

payments made by TARP recipients. This Look Back Review requires a review of all 

bonuses, retention awards, and other compensation paid to the Top 25 during the period 

beginning on the date the TARP recipient first received financial assistance until February 

17, 2009, commonly referred to as the Review Period. Under the Rule, the Special Master 

was charged with administering the Look Back Review. 

B. Data Request

On March 23, 2010, the Special Master issued information requests to the 419 

TARP recipients covered by the review, along with detailed instructions for submitting 

compensation data.96 The Special Master did not request detailed compensation data for 

Top 25 executives who received $500,000 or less in “annual compensation” during each 

fiscal year within the Review Period. The Special Master established this exclusion 

pursuant to his administrative discretion under the Rule, having concluded that payments to 

these employees were highly unlikely to be inconsistent with the Public Interest Standard. 

Instead, TARP recipients were permitted to simply certify how many of their Top 25 

executives were eligible for the exclusion.97

For each Top 25 executive whose compensation exceeded $500,000 threshold, the 

following data was required to be submitted, as applicable:98 (i) name, (ii) title in 2008 and 

2009, (ii) historical annual compensation information from 2007, 2008 and 2009, (iii) 

employment termination date, and (iv) an accounting of all compensation provided to the 

employee during the Review Period.99 TARP recipients had 30 days to submit 

compensation data and certifications,100 and were generally timely with their submissions, 

as well as with any corrections due to technical or clerical errors. 

Of the 419 TARP recipients covered by the review, 240 certified that none of their 

Top 25 earned more than $500,000 in annual compensation during each year covered by the 

Review Period. This concluded the review of payments at these companies. Of the 

remaining 179 companies, most had numerous excluded employees as well. The number of 

Top 25 executives subject to the next stage of the review therefore was reduced to less than 

1,700 from at least 10,500. 

C. Data Analysis

Working with technology staff and contractors detailed from the Office of 

Financial Stability, the Office of the Special Master created a database to store the 

compensation data and provide a platform to examine it. The system allowed analysis of 

payments during the Review Period on an employee-by-employee and company-bycompany basis, looking at multiple factors, including payment structure and allocation (i.e., 

incentive compensation, retention awards, golden parachute payments, etc.), aggregate 

amounts relative to firms of comparable size and amount of assistance received, payment 
13 

timing, whether the firm repaid financial assistance, and descriptions of incentive payments 

and awards. 

The analysis focused in particular on payments that fell within categories that were 

restricted after the Review Period by the Recovery Act and the Rule: stock grants and cash 

bonuses paid or accrued to certain executives;101 golden parachute payments made to any 

Top 10 Employee;102 tax gross-ups paid to any Top 25 executive.103 Although TARP 

recipients generally were not prohibited from making these types of payments during the 

Review Period,104 the subsequent legislation and regulations suggest that a payment that 

was contrary to the Public Interest Standard would more likely fall within one of these 

disfavored categories. 

D. Findings

The 179 TARP recipients that submitted detailed compensation data made 

compensation payments to Top 25 executives during the Review Period totaling $2.3 

billion. $1.7 billion of this amount, or approximately 74% of all payments made during the 

Review Period, consists of payments that fall into the disfavored categories described 

above.105 Of the 179 institutions covered by the second stage of the review, 126 made at 

least some amount of these types of payments; however, $1.6 billion of the $1.7 billion in 

payments came from 17 institutions.106

The Rule directs the Special Master to use the same six principles applied in the 

review of compensation structures and payments when determining whether payments 

made during the Review Period were inconsistent with the Public Interest Standard: risk; 

taxpayer return; appropriate allocation; performance-based compensation; comparable 

structures and payments; and, employee contribution to TARP recipient value.107

In reaching determinations regarding the reviewed payments, two factors in 

particular contributed to the Special Master’s conclusion. First, as noted above, payments 

of these types were permitted by the rules and regulations in place at the time.108 Second, 

more than 90% of the payments in disfavored categories were made by firms that have 

provided full reimbursement of their TARP obligations, or, as Exceptional Assistance 

Recipients, have significantly restructured the compensation arrangements of their Top 25 

under the Special Master’s oversight, which takes prior payments into account.109

Taking account of these factors, the Special Master did not determine that any 

reviewed payment was inconsistent with the Public Interest Standard. It is important to 

note that this outcome does not express a conclusion that these payments were appropriate 

or advisable, particularly in light of the circumstances facing the financial system generally, 

and some institutions specifically, in late 2008 and early 2009. 

E. Proposed Policy

Because the Special Master determined that no payments made during the Review 

Period were contrary to the Public Interest Standard, he had no authority under the statute 

or the Rule to “seek to negotiate ... appropriate reimbursement to the Federal 

Government.”110 The Special Master nevertheless concluded that some action was 

warranted. He therefore proposed that all TARP recipients, and in particular the 17 
14 

companies identified during the review, adopt a prospective compensation policy that 

would provide companies the authority to alter pending payments to executives in the event 

of a financial crisis.111

Under the proposed “brake” policy, in the event that a company’s board of 

directors identifies extraordinary adverse circumstances that constitute a significant threat 

to the financial viability of the company, the compensation committee would have the 

authority to restructure, reduce or cancel pending payments to executives—and this 

authority would supersede any rights and entitlements executives have in normal 

circumstances.112 The proposed policy would give compensation committees flexibility to 

set and adjust compensation at crucial moments. This authority is consistent with 

provisions in the new regulatory reform law,113 which strengthen committee independence, 

and with banking regulators’ guidance on incentive compensation,114 which calls for 

effective oversight by directors and an appropriate balance of risk and reward. Had such a 

policy been in place during late 2008 and early 2009, it might have prevented some of the 

payments later described by the Special Master as ill-advised. 

Adoption of the proposed policy by any firm would be entirely voluntary. 

Because the Special Master did not determine that any payment was inconsistent with the 

Public Interest Standard, the policy is not a remedy or settlement. Rather, the Special 

Master introduced the proposal as a matter of good public policy that should be considered 

by TARP recipients and other firms. 
15 

V. OBSERVATIONS AND RECOMMENDATIONS 

My departure does not result in any changes under the statute or Rule—the 

Office’s work will continue—but it does occasion an opportunity for observation. 

The Office has done its job so far: establishing a determination process; designing 

pay packages that both respect taxpayers and keep executives on board. The need for an 

outside Special Master has lessened. In my view, a more permanent Treasury official 

should be appointed to lead the Office, using the current blueprint with the benefits of 

hindsight and our work to date. For that official, I have two recommendations: 

First, keep the core set of standards, based on the principles in the Rule, that 

grounded and clarified our process: Limit guaranteed cash. Demand a performance 

component for most compensation. Focus on long-term value creation. Stop excessive 

perquisites and other giveaways. And hold the line on cash salaries—this reinforces the 

other building blocks, and makes firms propose structures that focus executives on stability 

and performance. 

Second, continue the constructive dialogue with the leadership, advisors and 

directors of the firms. This provides a necessary perspective on each company’s culture, 

sensitivities and objectives. Their insights deserve, and have been given, substantial 

weight; however, some skepticism is warranted with regard to claims that significant 

restructuring of compensation will lead to increased executive turnover and prevent 

institutions from attracting new talent. In my experience, this generally has not been the 

case. 

The program is concluding its fourteenth month. The Special Master has issued 33 

compensation determinations and completed the Look Back Review. There are four 

exceptional assistance recipients remaining for the Office’s attention, and a useful model 

remains in place for future determinations. But the Office’s useful model is not a model for 

use more broadly. The extreme level of scrutiny applied to compensation arrangements by 

the Special Master is warranted by the circumstances of the firms under his jurisdiction. 

But given the extraordinary nature of those circumstances, it would be inappropriate (as 

well as impractical) to replicate the program across a larger number of firms. I advise 

against any expansion of the Office’s jurisdiction. 
16 

NOTES 

1 Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, 122 Stat. 3765 

(codified as amended at 12 U.S.C. §§ 5201-5261, 31 U.S.C. §1105, and scattered 

sections of 26 U.S.C.). Relevant excerpts of EESA are attached as Exhibit 1. 

2 Id. § 2(1). 

3 Id. § 101(a)(1). 

4 See id. § 111(b)(1). Section 111 of EESA was amended and restated by section 7001 of 

the Recovery Act. 

5 Id. § 111(b)(2). 

6 Id. § 111(b)(2)(A). 

7 Id. § 111(b)(2)(B). 

8 Id. § 111(b)(2)(C). 

9 73 Fed. Reg. 62,205 (Oct. 20, 2008). Treasury simultaneously provided guidance 

covering other TARP programs. The guidance for the Program for Systemically 

Significant Failing Institutions—AIG—applied similar standards as the rule for CPP 

participants, plus a more stringent rule on golden parachute payments. See Treas. 

Notice 2008-PSSFI. 

10 Press Release, Treasury Announces New Restrictions on Executive Compensation (Feb. 

4, 2009), http://www.ustreas.gov/press/releases/tg15.htm. 

11 American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115. 

Relevant excerpts of the Recovery Act are attached as Exhibit 2. 

12 12 U.S.C. § 5221(b)(3)(B). 

13 Id. § 5221(b)(3)(C). 

14 Id. § 5221(a)(2). 

15 Id. § 5221(b)(3)(D)(i). 

16 Id. § 5221(b)(3)(D)(iii). 

17 Id. § 5221(b)(3)(D)(ii). 

18 Id. § 5221(b)(3)(E). 

19 Id. § 5221(c)(1). 

20 Id. § 5221(c)(2). 

21 Id. § 5221(d). Such policies cover expenditures such as entertainment or events, office 

and facility renovations, aviation or other transportation services, or other expenses 

unrelated to the normal conduct of the firm’s business. Id.

22 Id. § 5221(e). The SEC issued final regulations implementing this requirement on 

January 19, 2010. See 75 Fed. Reg. 2,789 (Jan. 19, 2010). 
17 

23 Id. § 5221(b)(4). 

24 Id. § 5221(f)(1). 

25 Id. § 5221(f)(2). 

26 Id. § 5221(h). 

27 TARP Standards for Compensation and Corporate Governance, 74 Fed. Reg. 28,394 

(June 15, 2009). The Rule (and subsequent technical corrections) are attached as 

Exhibit 4. 

28 See id. at 28,396. 

29 See 12 U.S.C. § 5221(b)(1)-(2). 

30 31 C.F.R. § 30.11(d). 

31 Id. § 30.11(b). The number of employees covered by the perquisite disclosure 

requirement, like the standard prohibiting bonus accruals and payments, ranges from 

one to twenty-five depending on the amount of taxpayer assistance provided. Id.

32 See id. § 30.11(c). 

33 See id. § 30.11(a). 

34 See Fact Sheet, United States Department of the Treasury, Interim Final Rule on TARP 

Standards for Compensation and Corporate Governance (June 10, 2009). A copy of the 

Fact Sheet is attached as Exhibit 3. 

35 31 C.F.R. § 30.16(a). Although appointed by the Secretary, the Special Master reports 

to the Assistant Secretary for Financial Stability. See Letter from Timothy F. Geithner, 

Secretary of the Treasury, to Elizabeth Warren, Congressional Oversight Panel Chair 11 

(February 16, 2010), http://cop.senate.gov/documents/letter-021610-cop.pdf. 

36 Id. § 30.16(a)(3)(i)-(ii). 

37 Id. § 30.16(a)(1). 

38 Id. § 30.16(a)(2). 

39 See 74 Fed. Reg. at 28,404. 

40 31 C.F.R. § 30.1. The Rule defines “exceptional financial assistance” as assistance as 

“any financial assistance provided under the Programs for Systemically Significant 

Failing Institutions, the Targeted Investment Program, the Automotive Industry 

Financing Program, and any new program designated by the Secretary as providing 

exceptional financial assistance.” Id.

41 31 C.F.R. § 30.11(a). 

42 The full names of the institutions at the time: American International Group, Inc., Bank 

of America Corporation, Chrysler Financial Services Americas LLC, Chrysler Group 

LLC, Citigroup Inc., General Motors Company and GMAC, Inc. 

43 Bank of America repaid its TARP obligations on December 9, 2009. See Letter to Bank 

of America, infra note 82. Citigroup repaid its obligations under exceptional assistance 
18 

programs on December 23, 2009. See Letter to Citigroup, infra note 83. Chrysler 

Financial’s TARP obligations were extinguished in consideration of a payment made on 

May 14, 2010. See Press Release, United States Department of the Treasury, Chrysler 

Financial Parent Company Repays $1.9 Billion in Settlement of Original Chrysler Loan 

(May 17, 2010), http://www.ustreas.gov/press/releases/tg700.htm. 

44 Id. § 30.16(a)(3)(i). 

45 Id. § 30.16(a)(3)(ii). 

46 Id. § 30.16(a)(3)(i)-(ii). 

47 Id. § 30.16(b)(1)(i). 

48 Id. § 30.16(b)(1)(ii). 

49 Id. § 30.16(b)(1)(iii). 

50 Id. § 30.16(b)(1)(iv). 

51 Id. § 30.16(b)(1)(v). 

52 Id. § 30.16(b)(1)(vi). 

53 Id. § 30.16(b). 

54 Id. 

55 Id. § 30.16(a)(3). 

56 Id. § 30.16(a)(3)(ii). 

57 Id. § 30.16(a)(3)(i). 

58 Id. § 30.16(a)(1); e.g., Frequently Asked Questions – TARP Standards for 

Compensation and Corporate Governance. A copy of the FAQs is attached as Exhibit 5. 

59 Id. The Special Master has only issued advisory opinions in circumstances regarding 

exceptional assistance recipients. E.g., Letter from Kenneth R. Feinberg, Special 

Master for TARP Executive Compensation to American International Group, Inc., and 

American Life Insurance Company regarding MetLife’s Purchase of American Life 

Insurance Company (March 5, 2010). A copy of this Letter is attached as Exhibit 6. 

60 Id. § 30.16(a)(4). 

61 Id. § 30.16(a)(2). 

62 Id. 

63 Id. 

64 See 12 U.S.C. § 5231. 

65 Id. § 5214. 

66 Id. § 5233. 

67 Id. § 5226. 
19 

68 Executive Compensation: How Much is Too Much?: Hearing before the H. Comm. on 

Oversight and Government Reform, 111th Cong. (2009), available at

http://groc.edgeboss.net/wmedia/groc/transfer/10.28.09.fc.execcomp.wvx (archived 

video of the hearing). A copy of the Special Master’s written testimony is attached as 

Exhibit 7. 

69 Compensation in the Financial Services Industry – Government Perspectives: Hearing 

before the H. Comm. on Financial Services, 111th Cong. (2010), available at

http://financialserv.edgeboss.net/wmedia/financialserv/hearing022510.wvx (archived 

video of the hearing). A copy of the Special Master’s written testimony is attached as 

Exhibit 8. 

70 See 31 C.F.R. § 30.16(c)(1). 

71 See http://www.financialstability.gov/about/spcMaster.html 

72 See 31 C.F.R. § 30.16(b)(1)(iv). 

73 See id. § 30.16. 

74 See id. § 30.16(b)(1)(iv). 

75 See id. § 30.16(a)(3)(ii). 

76 See 31 C.F.R. § 30.16(b)(1)(iv). 

77 See id. § 30.16(b)(1)(iii). 

78 See Financial Stability Board, Principles for Sound Compensation Practices—

Implementation Standards 3 (2009) (recommending that substantial portions of 

compensation be paid in stock and be deferred at least three years). 

79 See Fact Sheet, United States Department of the Treasury, The Special Master for 

TARP Executive Compensation Issues First Rulings (October 22, 2009). A copy of this 

Fact Sheet is attached as Exhibit 9; copies of the determinations are attached as Exhibits 

10-A through 10-G. 

80 See id. 

81 See Fact Sheet, United States Department of the Treasury, Special Master Issues 2010 

Rulings for Top 25 Executives at Firms Receiving Exceptional Taxpayer Assistance 

(March 23, 2010). A copy of this Fact Sheet is attached as Exhibit 16; copies of the 

determinations are attached as Exhibits17-A through 17-E. 

82 See Letter from Special Master Kenneth R. Feinberg to Bank of America Corporation 

regarding Compensation Structures for Executive Officers and Certain Most Highly 

Compensated Employees (December 11, 2009). A copy of this Letter is attached as 

Exhibit 13. 

83 See Letter from Special Master Kenneth R. Feinberg to Citigroup Inc. regarding 

Compensation Structures for Executive Officers and Certain Most Highly Compensated 

Employees (December 23, 2009). A copy of this Letter is attached as Exhibit 14. 

84 See March 2010 Fact Sheet, supra note 81. 
20 

85 See Fact Sheet, United States Department of the Treasury, The Special Master for 

TARP Executive Compensation Rules on Compensation Structures for Certain 

Executive Officers and Most Highly Compensated Employees 26–100 (December 11, 

2009). A copy of this Fact Sheet is attached as Exhibit 11; copies of the determinations 

are attached as Exhibits 12-A through 12-E. 

86 See Letter to Bank of America, supra note 82. 

87 See 31 C.F.R. § 30.16(a)(3)(ii). See also Letter from Special Master Kenneth R. 

Feinberg to Chrysler Financial regarding Proposed Compensation Structures for Certain 

Executive Officers and Most Highly Compensated Employees (December 11, 2009). A 

copy of this Letter is attached as Exhibit 14. 

88 See December 2009 Fact Sheet, supra note 81. 

89 See Letter to Citigroup, supra note 83. 

90 See 31 C.F.R. § 30.16(a)(3)(ii). See also Letter from Special Master Kenneth R. 

Feinberg to Chrysler Group LLC regarding Proposed Compensation Structures for 

Certain Executive Officers and Most Highly Compensated Employees (April 16, 2010). 

A copy of this Letter is attached as Exhibit 19. 

91 Copies of the determinations are attached as Exhibits 18-A through 18-D. 

92 Copies of the supplemental determinations are attached as Exhibits 20-A through 20-M. 

93 See FAQs, supra note 58, at Q4. 

94 See 31 C.F.R. § 30.16(c)(1). 

95 See 31 C.F.R. § 30.16(c)(2). 

96 See Letter from Special Master Kenneth R. Feinberg to TARP recipients, regarding the 

Special Master Review of Past Compensation Payments (March 23, 2010). A copy of 

this Letter is attached as Exhibit 21. 

97 See Office of the Special Master for TARP Executive Compensation, Compensation 

Review Data Request Form Instructions (March 23, 2010). A copy of the Instructions, 

and a set of FAQs the Office published regarding them, are attached as Exhibits 22 and 

23. 

98 Id.

99 Id.

100 See 31 C.F.R. § 30.16(a)(2) (noting that “TARP recipients must submit any requested 

information to the Special Master within 30 days of the request”). 

101 See id. § 30.10. 

102 See id. § 30.9. 

103 See id. § 30.11(d) (prohibiting gross-ups to any Top 25 executive of a TARP recipient). 

104 With the exception of golden parachute payments, Section 111 of EESA as originally 

enacted provided for general standards rather than outright prohibitions on specific 

types of payments. See supra notes 5-8 and accompanying text. 
21 

105 See Fact Sheet, United States Department of the Treasury, The Special Master for 

TARP Executive Compensation Concludes the Review of Prior Payments (July 23, 

2010). A copy of this Fact Sheet is attached as Exhibit 24. 

106 Id. These 17 institutions are: American Express Company; American International 

Group, Inc.; Bank of America Corporation; Boston Private Financial Holdings, Inc.; 

Capital One Financial Corporation; CIT Group Inc.; Citigroup Inc.; JPMorgan Chase & 

Co.; M&T Bank Corporation; Morgan Stanley; Regions Financial Corporation; 

SunTrust Banks, Inc.; The Bank of New York Mellon Corporation; The Goldman Sachs 

Group, Inc.; The PNC Financial Services Group, Inc.; U.S. Bancorp; and Wells Fargo & 

Company. 

107 See supra text accompanying notes 47-52 for an explanation of these principles. 

108 See 31 C.F.R. § 30.16(b)(1) (directing the Special Master to apply the principles by 

considering the facts and circumstances at the time the compensation was granted, 

earned or paid, as appropriate). 

109 See July 2010 Fact Sheet, supra note 105. See also 31 C.F.R. § 30.16(b)(ii) (providing 

ability to repay TARP as a factor in the principles); id. § 30.16(a)(3)(i)-(ii) (providing 

that the Special Master may consider prior payments or structures when reaching 

determinations regarding payments or structures that are subject to review). 

110 See 12. U.S.C. § 5221(f)(2). 

111 See July 2010 Fact Sheet, supra note 105. 

112 See Office of the Special Master for TARP Executive Compensation, Adoption 

Standards For Proposed Compensation Policy (July 23, 2010). A copy of the adoption 

standards is attached as Exhibit 25. 

113 See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-

203, § 931, 124 Stat. 1376, (2010). 

114 See Guidance on Sound Incentive Compensation Policies, 75 Fed. Reg. 36,395 (Office 

of the Comptroller of the Currency, Bd. of Governors of the Fed. Reserve System, Fed. 

Deposit Ins. Corp., and the Office of Thrift Supervision, June 25, 2010). 

23 

GLOSSARY OF DEFINED TERMS 

Covered Employees 26–100 .................. The employees of an Exceptional Assistance 

Recipient whose compensation structures—but not 

individual payment amounts—are subject to 

Special Master approval. This group consists of 

the 75 most highly compensated employees who 

are not in the Top 25, plus any executive officer 

who is not in the Top 25 or the group of 75. 

EESA ..................................................... The Emergency Economic Stabilization Act of 

2008. 

Exceptional Assistance Recipient .......... A firm receiving taxpayer support under one of the 

TARP programs that provides “exceptional” 

assistance: the Program for Systemically 

Significant Financial Institutions (now known as 

the AIG Investment Program), the Targeted 

Investment Program and the Automotive Industry 

Finance Program. 

Look Back Review ................................ The Special Master’s review of payments that 

TARP recipients made to Top 25 executives before 

the Recovery Act and Treasury established tighter 

standards on compensation and corporate 

governance. 

Office ..................................................... The Office of the Special Master for TARP 

Executive Compensation. 

Public Interest Standard ......................... The Special Master’s review standard, which is 

applied by using six principles enumerated in the 

Rule. To satisfy the standard, a payment (or 

potential payment) must not be inconsistent with 

the purposes of Section 111 of ESSA or TARP, or 

otherwise contrary to the public interest. 

Recovery Act ......................................... The American Recovery and Reinvestment Act of 

2009. 

Review Period ....................................... The period subject to the Look Back Review, 

beginning on the date a TARP recipient first 

received assistance under a TARP program and 

ending on February 17, 2009. 

Rule ....................................................... Treasury’s Interim Final Rule on TARP Standards 

for Compensation and Corporate Governance. 

SEC ........................................................ The Securities and Exchange Commission. 
24 

Secretary ................................................. The Secretary of the Treasury. 

Special Master ........................................ The Special Master for TARP Executive 

Compensation. 

TARP...................................................... The Troubled Asset Relief Program. 

TARP recipient ....................................... An institution receiving assistance under the 

Troubled Asset Relief Program. 

Top 25 .................................................... The group of employees of a TARP recipient 

consisting of the company’s “senior executive 

officers” and its 20 next most highly compensated 

employees. SEC compensation disclosure rules are 

used to identify the senior executive officers 

(generally the CEO, CFO and three other executive 

officer) and provide the method for determining an 

employee’s level of compensation. 

Treasury .................................................. The Department of the Treasury. 
25 

EXHIBITS 

Part I

1. The Emergency Economic Stabilization Act of 2008 (excerpts) .................................. E1 

2. The American Recovery and Reinvestment Act of 2009 (excerpts) ............................ E9 

3. Fact Sheet: The IFR on TARP Standards for Compensation 

and Corporate Governance ......................................................................................... E15 

4. Interim Final Rule on TARP Standards for Compensation 

and Corporate Governance (with subsequent technical corrections) .......................... E20 

Part II

5. Frequently Asked Questions: TARP Standards for Compensation and 

Corporate Governance ................................................................................................ E56 

6. Letter from Kenneth R. Feinberg, Special Master for TARP Executive 

Compensation to American International Group, Inc., and American Life 

Insurance Company regarding MetLife’s Purchase of American 

Life Insurance Company (Mar. 5, 2010) .................................................................... E63 

7. Written testimony of Special Master Kenneth R. Feinberg before the 

Committee on Oversight and Government Reform on October 28, 2009 .................. E66 

8. Written testimony of Special Master Kenneth R. Feinberg before 

the House Committee on Financial Services on February 25, 2010 ........................... E73 

Part III

9. Fact Sheet: The Special Master for TARP Executive Compensation 

Issues First Rulings (Oct. 22, 2009) ........................................................................... E79 

10. 2009 Top 25 determinations 

A. AIG ...................................................................................................................... E83 

B. Bank of America ............................................................................................... E105 

C. Chrysler ............................................................................................................. E125 

D. Chrysler Financial ............................................................................................. E145 

E. Citigroup (with subsequent technical corrections) ............................................ E160 

F. General Motors .................................................................................................. E184 

G. GMAC ............................................................................................................... E202 
26 

11. Fact Sheet: The Special Master for TARP Executive Compensation 

Rules on Compensation Structures for Certain Executive Officers 

and Most Highly Compensated Employees 26–100 ................................................ E221 

12. 2009 Covered Employees 26–100 determinations and letters 

A. AIG ................................................................................................................... E225 

B. Chrysler ............................................................................................................. E245 

C. Citigroup ........................................................................................................... E247 

D. General Motors ................................................................................................. E265 

E. GMAC .............................................................................................................. E285 

13. Letter from Special Master Kenneth R. Feinberg to Bank of America 

Corporation regarding Compensation Structures for Executive Officers 

and Certain Most Highly Compensated Employees (Dec. 11, 2009) ....................... E303 

14. Letter from Special Master Kenneth R. Feinberg to Chrysler Financial 

regarding Compensation Structures for Executive Officers and Certain 

Most Highly Compensated Employees (Dec. 11, 2009) .......................................... E304 

15. Letter from Special Master Kenneth R. Feinberg to Citigroup Inc. regarding 

Compensation Structures for Executive Officers and Certain Most Highly 

Compensated Employees (Dec. 23, 2009) ............................................................... E306 

16. Fact Sheet: Special Master Issues 2010 Rulings for Top 25 Executives 

at Firms Receiving Exceptional Taxpayer Assistance (Mar. 23, 2010) ................... E307 

17. 2010 Top 25 determinations 

A. AIG ................................................................................................................... E310 

B. Chrysler ............................................................................................................. E328 

C. Chrysler Financial ............................................................................................. E343 

D. General Motors ................................................................................................. E357 

E. GMAC .............................................................................................................. E372 

18. 2010 Covered Employees 26–100 determinations and letters 

A. AIG ................................................................................................................... E389 

B. Chrysler Financial ............................................................................................. E394 

C. General Motors ................................................................................................. E396 

D. GMAC .............................................................................................................. E401 
27 

19. Letter from Special Master Kenneth R. Feinberg to Chrysler Group LLC 

regarding Compensation Structures for Executive Officers and Certain 

Most Highly Compensated Employees (December 11, 2009) .................................. E406 

20. Supplemental determinations and responses to reconsideration requests 

A. AIG CEO compensation (Oct. 2, 2009) ............................................................ E408 

B. AIG reconsideration request (Dec. 21, 2009) .................................................... E414 

C. Chrysler CEO compensation(Dec. 23, 2009) .................................................... E419 

D. GM compensation structures (Dec. 23, 2009) ................................................... E422 

E. GM CFO compensation (Dec. 23, 2009) ........................................................... E426 

F. GMAC CEO compensation (Dec. 23, 2009) ..................................................... E431 

G. AIG compensation structure (Feb. 5, 2010) ...................................................... E434 

H. Chrysler long-term restricted stock grants (Mar. 12, 2010) .............................. E440 

I. AIG compensation structure (May 20, 2010) .................................................... E442 

J. GM reconsideration request (Jun. 10, 2010) ..................................................... E445 

K. GM compensation structures (Jun. 23, 2009) .................................................... E447 

L. AIG compensation structures (Aug. 3, 2010) .................................................... E449 

M. Ally Financial compensation structures (Aug. 3, 2010) .................................... E454 

Part IV

21. Letter from Special Master Kenneth R. Feinberg to TARP recipients, 

regarding the Special Master Review of Past Compensation Payments 

(Mar. 23, 2010) ......................................................................................................... E457 

22. Compensation Review Data Request Form Instructions ......................................... E462 

23. Frequently Asked Questions: Compensation Review Data Request ........................ E478 

24. Fact Sheet: The Special Master for TARP Executive Compensation 

Concludes the Review of Prior Payments (Jul. 23, 2010) ........................................ E480 

25. Adoption Standards and Q&As for the Special Master’s “Brake” Proposal ............ E483