April 20, 2009

Report: Loan rejection linked to exec pay

Top Chrysler Financial officials rejected a $750 million U.S. government loan because of federal restrictions on executive pay, sources said.

Citing sources familiar with the situation, The Washington Post reported Monday that Chrysler Financial officials decided instead to use more expensive private financing. However, the newspaper said, Chrysler Financial -- a key source of loans for Chrysler dealerships and car buyers -- issued a statement denying its executives refused to accept new restrictions on compensation.

Washington offered the loan as part of a broader effort to rescue the U.S. auto industry as major automakers struggle to avoid bankruptcy.

Executive compensation within companies receiving federal funds has become a contentious political issue -- complicating the decision for some companies considering accepting federal aid and causing some disruption in the Obama administration's plan to thaw a credit freeze by providing funds for lenders, the Post said.