Chrysler's financing arm has turned down a $750 million federal loan in order to skirt limits on executive pay, sources tell the Washington Post. Fearing that an earlier $1.5 billion loan was running out, the Treasury offered Chrysler Financial the extra credit about 2 weeks ago, attaching strict compensation limits. But 25 top executives refused to sign waivers regarding their own paychecks.
The company then turned to banks, including JP Morgan and Citigroup, to borrow the money at a higher borrowing rate. Chrysler Financial, a key lender to Chrysler customers and dealerships, denied today that its execs turned down the federal loan. "Executives have not been presented with any new demands with regard to executive compensation," a statement said.