Ally Bank 2012 Annual Report Download - page 217

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mitigators built into each plan such as caps, clawback features, and mandatory deferrals; and (3) implementing as necessary additional risk
mitigators or controls in plans.
Based on the risk assessments conducted during 2012, the Committee concluded that (1) the SEO compensation programs do not
encourage excessive and unnecessary risk taking that could threaten the value of Ally; (2) other employee compensation plans do not
encourage unnecessary or excessive risk taking that could threaten the value of the Company, or reward results to the detriment of
value creation; and (3) Ally's compensation programs do not encourage the manipulation of reported earnings.
The Committee, with the assistance of the Company's senior risk officers, will continue to assess the risks associated with Ally's
compensation plans every six months and take necessary steps to identify and eliminate any features that may unnecessarily expose Ally to
risks or encourage manipulation of reported earnings.
The Compensation, Nominating and Governance Committee certifies that:
• It has reviewed with senior risk officers the SEO compensation plans and has identified and limited features to ensure that
these plans do not encourage SEOs to take unnecessary and excessive risks that threaten the value of Ally.
• It has reviewed with senior risk officers the employee compensation plans and has identified and limited features as it deemed
necessary to ensure that Ally is not exposed to unnecessary risks.
• It has reviewed the employee compensation plans to eliminate any features in these plans that would encourage the
manipulation of reported earnings of Ally to enhance the compensation of any employee.
THE COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE
Kim S. Fennebresque (Committee Chairman)
Robert T. Blakely
Franklin W. Hobbs
Executive Compensation Discussion and Analysis
Introduction
For the full year 2012, Ally reported net income of $1.2 billion. Ally's industry-leading U.S. automotive finance franchise remained well-
positioned, despite significant competition. Ally grew U.S. net financing revenue 39 percent from the prior year, and also showed significant
growth in U.S. automotive earning assets, increasing 18 percent year-over-year, and the Ally Bank franchise continued to build its deposit
base and maintained strong customer loyalty with a unique consumer value proposition. Ally made significant strides in the fourth quarter on
its key strategic actions aimed at strengthening the company's longer term financial profile and accelerating repayment of the U.S.
Department of Treasury's investment.
Executive Compensation Limitations
In connection with our participation in TARP, certain determinations of the Office of the Special Master for TARP Executive
Compensation (Special Master), and other laws and regulations, Ally is subject to certain limitations on executive compensation, the most
significant of which are:
• Cash salaries are limited based on the determination of the Special Master;
• The majority of an SEO's compensation paid in equity that must be held long-term;
• Any incentive compensation granted must be in the form of long-term restricted equity that is contingent on performance and paid
out after incremental TARP repayments;
• Perquisites and “other” compensation capped at $25,000, with limited exceptions;
• Suspension of the accrual of benefits to supplemental executive retirement plans;
• Prohibition on incentives for SEOs that could cause them to take unnecessary or excessive risks;
• Clawback of any bonus or incentive compensation paid to an SEO based on statements of earnings, revenues, gains, or other
performance criteria that are later found to be materially inaccurate, is based on erroneous data that resulted in an accounting
restatement due to material noncompliance with any financial reporting requirement under the securities laws within the three years
prior to payment, or is found to require repayment under the provisions of any other Federal law or regulation that may govern the
Company's executive compensation; and
• Prohibition on any severance payable to the SEOs and the next five most highly compensated employees.
Table of Contents Ally Financial Inc. • Form 10-K