Watchdog: Treasury Let GM Overpay Execs

The Dept. of the Treasury failed to rein in "excessive pay" at three companies that the U.S. rescued in 2009, according to a government watchdog.

The annual audit by the special inspector general for the bailout program finds that 68 of the 69 top executives at General Motors, Ally Financial (formerly GMAC) and insurer American International Group received total compensation of at least $1 million, and 16 received $5 million or more.

But because most of the compensation was in stock and options, only three executives had cash salaries exceeding $1 million. The original goal was to cap most salaries at $500,000 and use stock awards to tie most compensation to performance.

The Treasury program's pay czar defends compensation she approved. She notes that the goal is to let companies pay their executives just enough to be able to hire and retain the talent they need to exit the bailout program quickly.

The special inspector says GM unsuccessfully petitioned Treasury Secretary Tim Geithner last March to remove the company's pay limits. The Treasury Dept. tells the Detroit Free Press it won't do so until it completes the sale of its remaining 19% GM stake which it aims to do within 15 months.

Total earnings for GM's top brass were reduced 12% last year, according to the report. It says compensation for GM CEO Dan Akerson in 2012 was frozen at $9 million, of which $1.7 million was cash salary. Vice Chairman Steve Girsky and CFO Dan Ammann received raises, earning $5.4 million ($600,000 salary) and $5 million ($750,000 salary), respectively.