The US government’s pay czar on Wednesday approved executive pay packages at bailed out companies for next year, exceeding government-imposed limits in the case of General Motors (GM).
Kenneth Feinberg, Treasury’s special master on pay, allowed up to US$9.5 million for GMAC’s incoming chief executive and up to US$6.2 million for General Motors’ new financial chief.
Feinberg was appointed in June amid taxpayer outrage that firms getting federal funds were paying top executives exorbitant salaries. He has tried to curb compensation and meet company demands for competitive salaries to attract and keep talent.
In a filing with US securities regulators, GM said the package for new chief financial officer Chris Liddell exceeded limits imposed on companies that received government aid.
Feinberg said GMAC CEO Michael Carpenter and Liddell will only realize those levels of compensation if the companies succeed over the long-term and are able to repay taxpayers. The compensation is largely in long-term stock.
“We have made every effort to tie competitive pay to overall company performance,” Feinberg said.
He also approved US$600,000 annually in salary stock for Chrysler CEO Sergio Marchionne for his service on the Chrysler board of directors, which is also under the pay czar’s jurisdiction. The approval for Marchionne does not include his compensation for his role as CEO, which is paid by Fiat SpA, where Marchionne is also CEO.
Liddell will start at GM on Jan. 1. He received just over US$3.5 million in his previous CFO job at Microsoft last fiscal year — about US$1.1 million in salary and bonus and about US$2.4 million in stock awards.
At Microsoft, Liddell was a key player in a range of initiatives that reflected the company’s transition to a slower growth business.
The totals approved by Feinberg include exceptions to the agency’s compensation rules. For example, Feinberg agreed to a salary of US$750,000 for Liddell, above the US$500,000 limit. Liddell is also allowed US$3.45 million in salary stock and US$2 million in restricted stock grants.
Feinberg approved US$950,000 in salary for GMAC CEO Michael Carpenter and stock salary up to US$5.415 million and restricted stock grants up to US$3.135 million.
“It doesn’t surprise me that they are having to pay substantial amounts of money,” said Todd Gershkowitz, a compensation consultant with Farient Advisors.
He said the incoming executives are entering situations that are not only messy, but risky, making it necessary for the companies to “pay a premium.”
“How Ken Feinberg knows what to do and what he is doing to come up with these approvals, I am very suspect,” Gershkowitz said.
Liddell, seen as a potential successor to GM chairman and acting CEO Ed Whitacre, faces the challenge of steering the top US automaker back to public ownership with an initial public offering expected as early as next year.
GM took over US$50 billion in US government aid and emerged from a bankruptcy directed by the Obama administration in July.
The automaker has said it expects to pay back the first tranche of its US government funding — US$6.7 billion in loans — by June.
GM’s current CFO, Ray Young, will be transferred to the automaker’s international operations based in Shanghai on Feb. 1, the firm said.
Pay curbs imposed by Feinberg sent financial giants Citigroup Inc and Bank of America Corp rushing to exit the bailout program. Both have agreed to pay back their taxpayer bailouts, taking them out of Feinberg’s purview.
Feinberg’s control has caused significant friction with insurer AIG, where top executives, including CEO Robert Benmosche, have reportedly considered quitting because of the pay constraints.
Treasury also said Citigroup, which paid back US$20 billion of bailout money this week, would no longer be subject to the executive pay restrictions next year for receiving “exceptional assistance” from the government. Restrictions are in place for compensation for this year.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
REGIONAL STABILITY: Taipei thanked the Biden administration for authorizing its 16th sale of military goods and services to uphold Taiwan’s defense and safety The US Department of State has approved the sale of US$228 million of military goods and services to Taiwan, the US Department of Defense said on Monday. The state department “made a determination approving a possible Foreign Military Sale” to the Taipei Economic and Cultural Representative Office in the US for “return, repair and reshipment of spare parts and related equipment,” the defense department’s Defense Security Cooperation Agency said in a news release. Taiwan had requested the purchase of items and services which include the “return, repair and reshipment of classified and unclassified spare parts for aircraft and related equipment; US Government
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from