Bailout Watch 445: Chrysler Retention Bonus Plans Under Threat
The Detroit Free Press rightly points out that ChryCo execs are headed straight for the AIG bonus backlash.
Rep. John Dingell warned Chrysler Wednesday against paying more than $20 million in retention bonuses, and called for a 95% tax on all bonuses paid by companies receiving any money through the Troubled Asset Relief Program…
“While I recognize these are different from the AIG bonuses, it is still dumb for them to pay out these bonuses at this time,” said Dingell, a Dearborn Democrat. “Chrysler should think long and hard about the optics of executive bonuses, especially at a time when UAW workers and retirees are making remarkable concessions.”
And what, pray tell is that difference—aside from the fact that Cerberus’ automaker happens to do business in Dingell’s backyard? On Tuesday, ChryCo CEO Bob “The Prowler” Nardelli’s explained. And then explained some more.
Chrysler Chief Executive Bob Nardelli said Tuesday that the company’s top 25 executives agreed not to accept any new bonuses or severance payments as a condition for receiving government loans. Later, Chrysler said those waivers did not apply to the 2007 retention bonuses.
Uh. OK. And, once again, the Treasury Department’s in the soup.
The Treasury Department has approved that portion of Chrysler’s retention bonuses that most of its 50 top executives earned before Jan. 2, 2009, the company said in a statement. Chrysler paid 25% of the bonuses in February 2008. A portion, but less than 75%, will be paid this year, the company said.
Just when you’re ready to cash Uncle Sam’s check . . . .
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This is more evidence a system that has become corrupt to the point where it's simply not fixable. BOD's are friends of the CEO's and on a mass scale, are unwilling to get rid of poor performers. Hell, look at elected officials. Tim "TurboTax" Geithner has been on the job 60 days and he's already a failure, yet no accountability for his lack of oversight or competence.
So Chrysler (and AIG etc) are worried that without the bonuses their talent will leave> I fail to see the problem, it's hardly like there's a lack of qualified and experienced people out there they can hire from - how about the amry of unemployed that's growing daily. I'll bet now that not one of them would ask for a signing or welcome bonus, and would probably work for a lower salary, and harder too as they have direct experience of not succeeding.
KatiePuckrick: "Well, wasn’t it these geniuses who got Chrysler into the pickle it’s in now? Surely, they should be paying them “sod off” bonuses?" Katie, I'm pretty sure this sort of suggestion was raised years ago by the Right Honorable James Hacker, MP, Minister for Administrative Affairs, and was thoroughly rebutted, with respect and in the fullness of time, by Sir Humphrey Appleby. In fact, I'd say that anyone who wants to truly understand how government policy is made should first watch all episodes of "Yes, Minister." Or at the very least, the episode wherein Hacker learns why a hospital that has no patients must continue to be funded and kept in existence.
50merc, For the record, I have all the episodes of "Yes, Minister" and "Yes, Prime Minister". However: 1. That was showing how UK government policy works. (All episodes were based on true stories) 2. This isn't government policy. This is just a business trying to push its luck. Like AIG and Citibank. P.S. The best episode was the UK government had a diplomatic incident with the French government.