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On April 1, 2011, the Acting Special Master for TARP Executive Compensation, Patricia Geoghegan, released 2011 compensation determinations for the “top 25” executives at the four remaining companies that received exceptional TARP assistance—AIG, Ally Financial (formerly GMAC), Chrysler and GM.
No increase in CEO compensation: The CEO compensation packages payable by AIG, Ally Financial and GM have not increased. Although there has been some modification in the mix of stock salary and long-term restricted stock for the CEO group, the cash component is frozen at 2010 levels. (As in past years, the Chrysler CEO is compensated by Fiat rather than by the taxpayer-assisted company.)
2011 pay packages follow the framework established in 2009 and 2010: As in the prior determinations, most pay (82 percent overall—the same percentage as in 2010), including target incentives, is in the form of stock, tying the ultimate value of the compensation to company performance. Transferability of the stock remains subject to deferral over a period of three years, and hedging of the stock compensation remains prohibited. Bonuses are subject to clawback. Cash salary continues to be limited (in more than 75 percent of cases to $500,000 or less). The $25,000 cap on perquisites continues to apply.
Companies have made progress in repaying taxpayer investments: Since the March 2010 “top 25” compensation rulings, the four companies have significantly improved their performance. The companies have repaid an aggregate of more than $36 billion in TARP investments, including through the sale of company securities held by Treasury. AIG has completed a major recapitalization. GM has implemented a successful IPO. All four companies are on track to make significant additional taxpayer repayments in 2011, depending on market conditions.
‘Top 25’ compensation packages: The group of 98 executives consists of the five senior executive officers and next 20 most highly compensated employees (based on 2010 compensation) at each of the four companies, minus departures since January 1, 2011. Of that total, 62 individuals were also in the 2010 “top 25”, and 36 are new members of the group. Some individual compensation packages increased, some decreased and some remained at 2010 levels. Overall the cash compensation for these 98 individuals decreased 18.2 percent, and their total direct compensation decreased 1.3 percent from 2010 levels. For the individuals in the “top 25” in both 2010 and 2011, cash compensation increased 4.7 percent and total direct compensation increased 4.4 percent. For the individuals new to the “top 25” group for 2011, cash compensation decreased 39 percent as compared to the cash they received for 2010, and total direct compensation decreased 9.6 percent as compared to 2010.