FARMINGTON HILLS, Mich. — Chrysler Financial recently announced that as part of its ongoing restructuring, effective immediately, the company has reduced its work force by about 12 percent.

This move, which apparently came quietly in late September, impacted all levels of Chrysler Financial's business.

Overall, including the 12-percent cut, the company has now reduced its U.S. work force by almost 26 percent since April 30.

"Chrysler Financial continues to offer dealership insurance and consumer retail financing products and is focused on servicing and collecting its ongoing loan portfolio of approximately $26 billion," officials noted.

The latest reduction in staffing came just before the recent news broke that Chrysler Financial is winding down business by Dec. 31, 2011.

As reported earlier this week by Auto Remarketing, news came late last week in a letter from Kenneth Feinberg, Office of the Special Master, to Chrysler Financial about the company's compensation plan.

In the letter, Feinberg states, "Chrysler Financial is currently following Treasury's directive to liquidate its business in an orderly fashion. Accordingly, Chrysler Financial is currently pursuing a successful wind-down of its operations by Dec. 31, 2011, and repayment of its lenders and investors."

In summary, Chrysler Financial fell into a difficult situation when the government agreed to give GMAC bank holding status, thus opening the door for bailout funds. As a part of this decision, GMAC was named the primary finance company for Chrysler and its dealers since it now had access to more capital.

In response to the letter from Feinberg, a Chrysler Financial spokeswoman gave Auto Remarketing and SubPrime Auto Finance News a statement that said, "Chrysler Financial is currently reviewing the details of the Special Master's ruling. Therefore, the company has no detailed comment at this time.

"As previously reported, the company continues to liquidate its Chrysler dealer portfolio and to transition the business to GMAC. Chrysler Financial remains focused on continuing to acquire, collect and service loans to assure repayment of its debt to its lenders and investors while pursuing other business opportunities," the statement added.

As part of the discussions for Chrysler Financial's compensation plans for its highest-paid employees, the company submitted a proposal with detailed information about these employees, tenure, historical compensation structure, market information and comparable salaries for similar positions.

Feinberg said in response, "Chrysler Financial's proposed compensation structures therefore emphasize that the company's unique business objectives, to wind down rather than to grow its operations, render the use of traditional business metrics in the determination of appropriate compensation impractical.

"Rather, Chrysler Financial's submission asserts that its success in the wind-down of operations and repayment of lenders and investors is largely dependent upon maintaining critical talent to enable the company to service and manage its portfolio during the wind-down process. The company also contends that the risk of employee departures must be minimized because Chrysler Financial has publicly stated that it intends to wind down its operations and will have difficulty attracting new employees," he continued.

Basically, Chrysler Financial's compensation proposal includes an annual cash base of salaries ranging from $175,872 to $1.5 million. This proposal would drop 2008-level salaries for the top-paid employees by about 10 percent to 67 percent. CF also apparently proposed payments of "other compensation, as well as perquisites to covered employees." These payments would vary in value.

Overall, the Special Master supports the company's proposal.

"In light of this review and analysis, the Special Master has determined that both the structural design of Chrysler Financial's proposals are consistent with the public interest standard," Feinberg wrote.

Generally, the Treasury has said it will base salaries for impacted companies on performance and long-term results.

"Unlike other Exceptional Assistance Recipients, however, Chrysler Financial's stated business objective, developed in consultation with Treasury, is to wind down its business in the near term. Under these unique circumstances, providing employees incentives over the appropriate compensation horizon may require cash compensation payable in base salary rather than longer-term incentives based on the performance of the company," Feinberg stated.

This news is the direct result of months of ongoing discussions between the Special Master, Treasury employees, Chrysler Financial officials and counsel.