By on June 26, 2012

Judging from their writings, many TTAC commenters are prime candidates for a job as CEO at one of the world’s largest automakers. However, be careful who you work for. Executive pay is all over the map. It ranges from a charitable contribution of $1.71 million given to Toyota’s CEO, to nearly $29 million a year on Ford’s Alan Mulally’s paystub.

This according to a table circulated among reporters who, perched precariously in the 6th floor balcony of the National Convention Hall at the Pacifico in Yokohama, observed Nissan’s 113th ordinary general shareholders meeting today.

What Auto CEOs Make

Toyoda’s pay was not on the table , it probably was too small to register properly. As a principal shareholder, Toyoda most likely has more tax efficient ways of remuneration at his disposal. Also, his career choices are limited, he is unlikely to be seduced by rival carmakers. Honda President Takanobu Ito’s salary ($1.55 million p.a.) also was too low for the table compiled by executive pay consultants Towers Watson.

Ghosn’s job is not up for grabs anyway. Despite rumors spread by Bloomberg last week, Ghosn is not about to retire. Those who waited for an announcement today went home disappointed. Instead, the press corps could witness (but not overhear) a stern and somewhat one-sided exchange of opinions between Bloomberg reporter Yuki Hagiwara and her alleged source Koji Okuda.

With the top spot out of the question, you may have your sights set on a board seat at Nissan. Again, be careful. Ghosn’s lieutenants are paid “below the median of the global market,” their boss says. Except for Ghosn and 5 other directors, no Nissan executive is paid more than “one oku yen,” which converts to $1.25 million, as TTAC’s advisor in cross-cultural affairs, Frau Schmitto-san, and a forex table assure me.

However, those salaries are about to rise. “In the future we have to make a more significant investment in executive compensation,” says Ghosn. In a clear reference to the talent pool in TTAC’s commentariat, Ghosn continues: “Recruiting and retaining the industry’s best and brightest is a competitive advantage that we cannot afford to lose.”

To rub it in, Ghosn says that he knows “from recent experience that our executives are also the target of recruitment from global competitors.” Ghosn himself was offered the much higher paying job as CEO of Ford, which he turned down. There also had been a chance of Ghosn heading up a merged GM and Renault, an alliance that was famously torpedoed by Rick Wagoner. With the $12.5 million from Nissan, and another $3.5 million from Renault, Ghosn makes as much as Marchionne, and he should be quite comfortable.

If Nissan’s Ghosn and his “paid below the median of the global market” executive team were hoping for compassion from the media, the hope was in vain. No compassion was forthcoming. First reports, beamed from the perch while the shareholders were still convening, were headlined that “Nissan’s Ghosn remains Japan’s top-paid CEO” and that “Ghosn’s Pay Rises as Nissan Profit Beats Rival Japan Carmakers’.”

Still interested in a top job at one of the world’s largest carmakers? Be careful, you will have many enviers. Before Nissan’s shareholders could attend the meeting, they had to walk a gauntlet of vociferous protesters who were against global standards in executive pay.

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35 Comments on “So You Want To Be CEO Of A Global Automaker? Wait Until You Hear The Pay...”


  • avatar
    Ron B.

    Sounds OK to me, if you love your Job you might work for peanuts just to experience the joy of making Pagani Zondas.

  • avatar
    Adamatari

    Wow, Mulally is really taking a LOT home. This chart is also only salary, right? What about other compensation – stock, etc?

    If nothing else, this sure proves that neither executive competence or company success are really related to salary. Mulally is good, but is Akerson really more than 4x better than Ito? The whole thing is a joke. They certainly shouldn’t be bragging that only Ghosn and 5 others are walking away with bankloads – that’s basically saying, “Only us at the top get rich, the rest of you? Ha ha, forget it”. And what about the pay at the BOTTOM? How does that compare? In my opinion, no company that gets rich off of keeping its workers poor should call itself a “success”, and they certainly shouldn’t be paying millions for executives… So that’s the table I really want to see – comparison of lowest salaries for workers across automakers. Perhaps adjusted to standard of living for the country it’s paid in, to be ultra fair. Or we could go with the old Ford method, can they afford the cars they make?

    Nothing is more pathetic than the rich complaining that they don’t make enough.

    • 0 avatar
      The Doctor

      That’s total compensation. I believe his actual salary is around $2m.

    • 0 avatar
      Dawnrazor

      Lots of good points there.

      What’s wrong for example with the idea of paying the executives a more down to earth “base” salary, with additional bonuses based upon overall performance of the company in a given year? No net profit at the end of the year or any employee layoffs, no bonus. When I say the base salary should be “down to earth”, I mean it shouldn’t be any more than 4-6X the average salary of all the company employees; something in the range of $300-600k is probably reasonable (good balance of fair pay for a difficult and demanding job with tantalizing incentives to take the organization “above and beyond” and strong motivation to treat employees as actual human beings rather than expendable drones).

      It’s reprehensible to me that any company would pay its executives salaries and bonuses which place them in the top 0.01% and afford them every conceivable luxury and indulgence regardless of the health and performance of the company as a whole, while at the same time often failing to provide even a living wage or any semblance of job security to workers at the low end. “Trickle-down economics”, my ass!

      The “Can the average employee afford the stuff he/she is making?” benchmark was (and still is) brilliant “common sense”.

      • 0 avatar
        bd2

        That’s b/c corporate CEOs have returned to days the of “robber-barons” where they actually feel that robbing the corporate till is “just rewards” (doesn’t hurt that the system is rigged in that all sit on each others BODs or compensations boards).

        In 2010, BOTH Mullaly and Ford, Jr, were each compensated in the ridiculous amount of $26.5 million (so over $50 million just for the 2 of them).

        In contrast, VW’s CEO, Winterkorn made a little over $12 million in 2010, and VW was a good bit more profitable.

        For 2011, Winterkorn’s compensation almost doubled – but VW made more in profits than GM, Ford and Chrysler COMBINED that year.

        Compensation really has little to do with actual performance (see the $210 million severance package Nardelli got at Home Depot, despite a lackluster performance).

        CEOs in the US used to make around what a top physician (neurosurgeon) or attorney (partner at a white-shoe firm) earned, but now they are compensated more like the top Wall St. execs.

  • avatar

    You wanna be a CEO?

    You wanna make millions of dollars each year???

    Write APPS FOR IPHONE/ANDROID.

    No education required.

    • 0 avatar
      Dawnrazor

      So true, yet I can’t help but think that the party can’t last forever.

      The smartphone market explosion we’ve seen over the past few years is starting to feel a lot like the “irrational exuberance” which led to the “dot-com” crash of the late 90s.

    • 0 avatar
      Botswana

      I don’t think it is quite as simple as that. There is already some indication that party is at an end. I almost never hit the app store or marketplace simply because there is too much crap to filter through. The noise to signal ratio is a turn-off. I’m not interested in spending my time on some app that is going to get lost in the shuffle and it is too hard to compete with established apps that show up at the top of all the ratings and download lists. I could spend a lot of time building an app and then see nothing for my efforts, and that’s while doing my current job. It’s the same risk any self employed venture takes and success is not a given. It is extremely hard to get noticed now and a few breakaway successes are not indicative of the market.

      Think Prius. It’s success has not meant success for all hybrids, in fact it remains the only successful hybrid.

    • 0 avatar
      indyb6

      Oh REALLY? Try creating an “app” for this website and let me know how “NO EDUCATION REQUIRED” works for you.

      They don’t have Computer Science degrees for nothing, son. And Objective-C is a PITA, alongside Apple’s approval process (if you know what I’m talking about).

      • 0 avatar
        Botswana

        Oh good point. We just went through the Apple certification process and it is a pain. Just getting to where you can develop is a hurdle all by itself.

        Google makes Android a little simpler but if you don’t know OOD then you’re SOL. If you don’t know what OOD is then chances are good you aren’t ready to write apps.

        I’m also curious how Google’s platform handles memory management or if it is more like Objective C, but I’ve never taken a hard look at it.

  • avatar
    juicy sushi

    I guess the next question is on CEO value-for-money. Is Mullaly worth $29 million a year? Is anyone in the car business worth that? Those are over-a-beer questions rather than the kind of thing that makes for informed comment and discussion, though. In 5 years we will know what kind of shareholder value they created. Until then, let the wild conjecture flow.

  • avatar
    dejal1

    Why stop at CEOs?

    Fernando Alonso makes $40,000,000 a year to drive a car.

    Garth Brook is worth $325,000,000 for singing, hasn’t had a hit in years and has a 5 year deal to sing in Las Vegas on weekends. I think it was a $100,000,000 deal. Also gets a private jet to fly in from Oklahoma.

    A-Rod is worth $300,000,000

    Etc…

    You are worth what you get. Doesn’t make it right or wrong, just the way it is, and it will never change.

    • 0 avatar
      MeaCulpa

      A jet to fly in from Oklahoma? That makes all that whaling ’bout horses and being a simple country boy seem a bit disingenuous.

      On point, CEO compensation and company performance generally doesn’t correlate, on the other hand, if the share holders likes the deal they are getting it’s their money to loose.

    • 0 avatar
      raph

      The entertainment and sports people are even more out of whack with reality than most CEOs making “million dollar decisions”, I certainly don’t begrudge them when some rabid knucklehead fan is willing to spend most of a weeks pay to go see a game or concert, pay for over priced poor quality food and some souvenirs that cost a few pennies to make.

    • 0 avatar
      bd2

      That’s a common but FALSE analogy.

      Sports stars, singers, actors, etc. are ENTERTAINERS and there is a much more direct correlation btwn their compensation and the amount of $$ they generate.

      People will pay $$ to see a star player at the ballpark, to see a film starring a particular actor or buy an album or concert ticket to see a particular singer or band.

      People do not purchase a car b/c of the CEO (the engineers and designers have a lot more to do with the reasons why people purchase a particular car).

  • avatar
    Oelmotor

    Winterkorn…Slash his salary to the level of Toyoda and use the $22 million to improve the quality of the so-called “Peoples Car.”

  • avatar
    tedward

    I see ludicrously high CEO pay as a tool for relatively unproven companies to buy their way into a decent IPO. It makes me uncomfortable, even in that context, becuase the decision making process is literally as short as “(insert analyst) working for (insert investment group) likes him/worked with him in the past, if he’s on board that will help out valuation” Hired. There is no expectation that the manager will actually do anything to justify the price-tag…but it’s relatively common for a good hiring(s) to have such a massive effect on eventual share prices that it pays for itself. That, IMO, is where it all started. If your company isn’t on the brink of a major share offering and your CEO is making tens of millions…well, you’re being bent over a barrel. Don’t forget to smile for the camera.

    Managers simply aren’t worth that kind of money. Fernando Alonso, Garth Brooks, A-Rod…those are people with extremely high value, high talent (relatively speaking) trades, who can’t easily be replaced on a true 1 to 1 basis. Any manager on the other hand, leaving aside law school/daddy connections, can be replaced by a nameless talent at a fraction of the price who may even outperform them. I’m not really anti-manager here, what I’m trying to point out is that they really aren’t the least replaceable people at any given company, and definitely aren’t worth the biggest bucks.

  • avatar
    Darkhorse

    The problem lies with Boards of Directors. These are often interlocking (my buddy sits on my BoD and I sit on his, etc.). This Good Old Boy’s Club insures top-heavy compensation.

  • avatar
    replica

    Companies are free to pay themselves and their people whatever they’d like. It’s a private business. It’s your choice to work for them and/or buy their products. Want to make CEO money? Be a CEO.

    • 0 avatar
      bd2

      Except that companies compensation boards are filled w/ CEO-buddies.

      Do you think the shareholders (the actual OWNERS of the company) really have a say regarding CEO compensation?

  • avatar
    Crosley

    I’ve also found it disgusting what professional athletes are paid, actors, studio producers, trial lawyers etc., yet no one seems to ever try and get the government involved to wrangle in their pay.

    At the end of the day, these are voluntary transactions, no one puts a gun to shareholders heads.

    CEO salaries can be ridiculous, but if a talented CEO at a large car company can increase sales by just 1% more than a less talented one, you’ve easily paid his absurd salary, added more paying jobs to the company, and increased shareholder value.

    • 0 avatar
      Dawnrazor

      “CEO salaries can be ridiculous, but if a talented CEO at a large car company can increase sales by just 1% more than a less talented one, you’ve easily paid his absurd salary, added more paying jobs to the company, and increased shareholder value.”

      And in that circumstance, most reasonable people would have no problem with them making the big bucks.

      The problem is, many CEOs are not particularly good leaders nor “talented”, and while their companies lose revenue and shed jobs they STILL receive ridiculous 7-figure “bonuses”. THIS is the source of the growing anti-corporate sentiment we are seeing right now. No one should ever be rewarded for essentially screwing up, yet the perception is that it happens all of the time in the upper echelons of the corporate world.

      • 0 avatar
        Botswana

        Just to add further perspective, it’s not so much the fact that they still get the bonuses, but there is no reciprocation for other workers.

        CEO screws up, pulls the rip-cord on their golden parachute and can collect a huge exit sum as part of their agreement.

        Average employee screws up? They will be lucky to even collect unemployment if the company decides to block it and may find themselves destitute and trying to explain to a potential employer why they are looking for a job.

        The golden parachute shouldn’t exist. I’m fine with executive compensation being whatever so long as the company is profitable and shareholders feel the compensation is worthwhile. When the company is talking layoffs then it should be a shared sacrifice. If you’re laying 10% of your workforce off that means you should be able to shed 10% of your management costs.

        I’ve seen it happen up close and personal. Watching employees lose their jobs and maybe some line level supervisors but still having the same number of directors and VP’s the next day.

      • 0 avatar
        Crosley

        I would agree that idiot CEOs shouldn’t be well compensated or that they deserve golden parachutes, but again, these are voluntary compensation plans drafted up by the owners of the company (shareholders) to lure what they perceive as CEOs that are “worth it”from going to another company.

        The best way to stop this sort of activity is for shareholders to be more involved with their voting rights and assert themselves with ridiculous compensation plans.

        But when you start talking about actual laws capping this sort of stuff, it opens up a Pandora’s box. What about a federal law where no professional athlete makes over $10 million a year? Or no actor can make over $5 million a movie? It might “feel” good, but you really start trampling on liberty and freedom when you get the law involved.

    • 0 avatar
      bd2

      As I had stated above, this is a FALSE analogy.

      • 0 avatar
        Crosley

        No, it’s not a false analogy. The owners of the company are the shareholders, if a majority of shareholders want something, it will happen, regardless if a Board member is a golfing buddy of the CEO.

        Look at Chesapeake Energy for a recent example of shareholders bucking their CEO and Board members when it was revealed they weren’t working for the best interest of shareholders.

        The real problem is, most retail shareholders are too apathetic.

    • 0 avatar
      icemilkcoffee

      Actually several states have specific taxes aimed at pro-athletes. Also- as we’ve already seen from the football and basketball leagues- the owners have pretty effectively controlled the players’ pay.

      Entertainers’ pay is almost always directly tied to their box office/ music sales receipts. They don’t get paid just to be a figurehead.

      • 0 avatar
        Crosley

        Should we pass laws that if a sports team performs poorly, the star athletes don’t get paid? Or if a movie bombs at the box office, an actor has to return all their money?

        Or instead we could just let the actual owners that risk their own capital to make decisions about what somebody is “worth” to the bottom line.

        I think I’ll take door number 2.

  • avatar
    tikki50

    CEO = Corporate Embezzlement Oportunist. No person is worth that, heck its not like the 100 people surrounding them dont “assist” with ideas, they didnt magically come up with a winner and deserve 9 million, right along with other the assisting directors they are way over paid for what they do. Unfortunately they are a small cult of people, hence the club mentality and why you wont see wage increases on the masses.

  • avatar
    Glen.H

    A bit of background here-Japanese CEOs generally don’t tend to get as much as their American, and increasingly, European equivalents right across business. There is much less inequality in earnings from top to bottom in Japan as competition between individuals is seen as less desirable than in Western society and working as a cohesive group is more prized.


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