Patricia Geoghegan, the pay czar tasked with reviewing the compensation of executives at companies that were bailed out by the taxpayers, relies on those bailed-out companies to tell her what is a reasonable salary for their executives.
“The regulation makes clear that we must consider market forces,” Geoghegan told a House Oversight and Government Reform subcommittee when arguing that the pay increases she approved of more than $500,000 a year are consistent with the market standards.
The recent raises give the lie to President Obama’s promise to restrain pay for companies subsidized by taxpayers. “As part of the reforms we’re announcing today, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 — a fraction of the salaries that have been reported recently,” Obama said in 2009, as Republican lawmakers recalled today. “And if these executives receive any additional compensation, it will come in the form of stock that can’t be paid up until taxpayers are paid back for their assistance.”
The inspector general criticizing Geoghegan’s decisions explained that it’s a bit of a rigged game. “The companies gave market data,” special inspector general Christy Romero told Rep. Jim Jordan, R-Ohio. “The Office of the Special Master [Geoghegan] looked at that market data and they went with the companies’ [recommended pay increases].”
Jordan paraphrased the companies as saying, “‘We think the average [salary] is here and this is what we want to be paid ... You’re asking Ally, 74 percent owned by the taxpayer, ‘give us the information [that determines the size of your pay raises].’”
Geoghegan assured Jordan that ‘we actually have the ability to evaluate the market data.”
Romero said that when she asked Geoghegan to explain why those pay increases were approved, “The Office of the Special Master’s reasoning largely parroted the reasoning of the companies.”