Top executives at three companies bailed out by US taxpayers during the 2008 financial crisis were ordered to take pay cuts by the federal government.
The US Department of Treasury says nearly 70 executives at American International Group Inc, Ally Financial Inc and General Motors Co had their annual compensation reduced by 10 percent. The CEOs of each firm had their pay frozen at last year’s level.
All three companies have yet to repay what they received from the US$700 billion bailout and therefore are subject to pay cuts.
AIG still owes taxpayers around US$50 billion. General Motors owes about US$25 billion and Ally Financial about US$12 billion.
Even with the compensation freeze, the chief executives are expected to be well paid this year.
General Motors CEO Daniel Akerson is expected to earn US$9 million in stock and salary this year. Ally Financial’s CEO Michael Carpenter is set to earn US$9.5 million in total compensation. AIG CEO Robert Benmosche will make US$10.5 million.
Akerson has criticized the pay limits, saying GM is losing some of its top talent in its executive ranks because of the government-imposed rules. The Detroit automaker received US$49.5 billion from the government in 2008 and 2009.
“It’s the reality we have to live with, as long as we’re under the restrictions,” said GM spokesman Jim Cain.
In a statement, Ally Financial said pay for its executives “continues to be in line with the stated guidelines” for bailed-out companies and the company is “squarely focused on delivering value for shareholders and repaying the remaining US Treasury investment.”
AIG declined to comment on the pay changes.