Ally Bank 2012 Annual Report Download - page 219

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During 2011, the Committee approved revisions to the peer group to increase the focus on bank holding companies. No changes were
made to the peer group during 2012, which consists of the ten financial services companies listed below:
• BB&T • KeyCorp • U.S. Bancorp
• Capital One Financial • PNC Financial • Wells Fargo
• Discover • Regions Financial
• Fifth Third Bancorp •SunTrust Banks
For 2012, survey data used for the remaining NEOs and other senior executives came from one or more survey sources, including the
Hewitt Total Compensation Measurement™ (TCM™) database, Towers Watson Executive Financial Services survey, McLagan Investment
Management survey, and McLagan Fixed Income Sales and Trading survey. Because multiple survey sources are used and not all survey
participants provide data for each of the remaining NEOs, it is not possible to list the survey participants included in our competitive data
analyzed for positions other than the CEO and the principal financial officer.
For executives below the Top 25 whose pay is not determined by the Special Master, our compensation philosophy is to set base salaries
and employee benefits at median competitive levels and to set annual incentive compensation to deliver total annual cash and equity
compensation up to or exceeding the 75th percentile when warranted by achievement of aggressive performance goals and top quartile
competitive performance. If annual performance goals are not achieved, annual incentive compensation is reduced or eliminated, and total
annual cash and equity compensation falls to below the market median. The size of long-term equity-based incentive awards relative to total
compensation is set annually to ensure senior management maintains an appropriate level of long-term balance in their total compensation
and to achieve individual differentiation of total compensation based on performance considerations and retention needs.
Due to the pay restrictions applicable to the NEOs under TARP, including limitations on incentive compensation, total direct
compensation rather than individual elements of pay (i.e., base salary, annual incentives, and long-term incentives) is set to be competitive.
The Committee sets proposed total direct compensation levels for each of the NEOs based on his or her job responsibilities. Once the
Committee determines and approves the proposed compensation packages for the NEOs, they are submitted to the Special Master for
approval. The Special Master then reviews the proposed packages to determine if they are aligned with TARP requirements and set at
appropriate market levels. The Special Master subsequently issues a Determination Letter, specifying the final design and allocation of total
pay approved for the NEOs. At the end of the year, the Committee reviews the performance of the NEOs relative to their individual goals and
objectives. For 2012, there was no incentive compensation (i.e., the long-term incentive restricted stock units (IRSUs)) eligible to be awarded
to any NEO under the Supplemental Determination Letters issued by the Special Master.
Role of Management in Compensation Decisions
Compensation recommendations for the NEOs other than the CEO and Thomas Marano are presented to and discussed with the
Committee by the CEO. The Committee then determines and approves the proposed compensation for the NEOs, which is submitted to the
Special Master for final approval.
The Committee determines and approves the compensation of the CEO without the recommendation of management. The Committee
exercises its responsibilities with respect to the determination of the compensation of Thomas Marano based on the recommendation of the
ResCap Board of Directors and, subsequent to May 14, 2012, upon Bankruptcy Court approval.
Components of Ally Compensation Program
Due to the TARP restrictions on cash compensation and limitations on incentive compensation, base salary is delivered in a combination
of cash and equity. All NEOs were ineligible to receive any incentives for 2012. We also offer limited perquisites and other benefits in order
to enhance the effectiveness of our NEOs in focusing their time and energy on performing their duties and responsibilities and to enable us to
offer a competitive compensation package to attract and retain senior executive talent.
Base Salary
Under our compensation philosophy, base salary is intended to provide a predictable level of compensation that is competitive in the
marketplace for the position responsibilities and individual skills, knowledge, and experience of each executive. However, the pay restrictions
under TARP significantly limit the form and amount of base salary paid in 2012. As a result, a significant portion of total direct compensation
is delivered in the form of equity-based salary for alignment with shareholders' interests.
Table of Contents Ally Financial Inc. • Form 10-K