Top executives at three companies bailed out by U.S. taxpayers during the 2008 financial crisis were ordered to take pay cuts by the federal government.
"It is the second straight year the government's special master [a position created by the Obama administration to monitor pay practices for bailed out companies], Patricia Geoghegan, has taken this step," CNN Money reports.
The Treasury Department says nearly 70 executives at American International Group Inc. (AIG), Ally Financial Inc. and General Motors Co. had their annual compensation reduced by 10 percent. The CEOs of each company had their pay frozen at 2011 levels.
All three companies have yet to repay what they received from the $700 billion bailout and therefore are subject to pay cuts.
AIG still owes taxpayers around $50 billion. General Motors owes about $25 billion. Ally Financial about $12 billion.
“The three were part of group of seven firms that got so-called exceptional assistance in the form of taxpayer-financed bailouts during the financial crisis,” Reuters reports. “Four of the original seven -- Bank of America, Citigroup, Chrysler Financial and Chrysler -- have already repaid their TARP money and left the program.”
Of course, this isn’t to say that the CEOs at these companies won’t be paid well this year.
General Motors CEO Daniel F. Akerson is expected to earn $9 million in stock and salary this year. Ally Financial's CEO Michael A. Carpenter is set to earn $9.5 million in total compensation. AIG CEO Robert Benmosche will make $10.5 million.
“A spokesperson for Ally Financial said its executive pay ‘continues to be in line with the stated guidelines for TARP companies’ and said its management team was focused on repaying the remaining TARP funds to Treasury,” Reuters reports.
“The other 69 executives are among the three firms' senior executive officers as well as the most highly compensated employees who work under them,” the report adds.
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 $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.
AIG declined to comment on the pay changes.
The Treasury ensures us the three firms are “making progress” in repaying their taxpayer funds, Reuters reports.
“It said AIG has reduced its obligations to the U.S. government by more than 75 percent, while Treasury has recovered nearly half the TARP funds it put into GM and close to one-third of the money that went to Ally Financial,” the report claims.
The Associated Press contributed to this report.