By on February 27, 2013


Yesterday, the House Oversight and Government Reform subcommittee held a hearing to look into executive compensation “at bailed-out firms that is egregiously out of line with what the President committed to the American people,” as Chairman Jim Jordan said. Jordan recalled that the President had committed “that top executives at firms that receive extraordinary help from U.S. tax payers will have their compensation capped at half a million dollars.” That clearly wasn’t the truth. Yesterday, we heard that GM CEO Dan Akerson, for example, made $9 million in 2012 and wanted $11.1  this year. Jordan said that “Treasury’s failure to protect tax payers is part of a disturbing pattern in which this administration makes promises to the public but the does not live up to them.” That’s not the only pattern that is disturbing.

Fight government waste, advance to 8:45

Yesterday, media outlets, including TTAC, received a message from GM spokesman Alan Adler, complaining about “leaked documents” and that “reports that General Motors has requested an increase in Dan Akerson’s 2013 compensation are false. In fact, Dan specifically asked to keep his compensation at the same level for 2013 as it was in 2012 and 2011.”

With this statement, GM continued the pattern of alienating its last friends. The Detroit Free Press, which initially had published the documents, writes today  that “GM called the report false, though the committee later released the same document showing a proposed total compensation package of $11.1 million for Akerson.” The Freep then put its finger on an even more embarrassing fact:

It turns out that Akerson already made $11.1 million in 2012, “because he was allowed to cash in stock awards he received in 2011,” the Freep says. So, $11.1 million in 2012 and $11.1 million in 2013 wouldn’t be a raise. At least not this year, sure. Splitting hairs may work in court, but not in the court of opinion. Trying to be too smart often looks very stupid.

We have linked to the full recording of the hearings. They are another example of Government waste, in this case of bytes and bandwidth. The first 8 minutes and 45 seconds are a recording of nothing. Your tax dollars at work.

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34 Comments on “House Committee Blasts Overpaid Bailed-Out Execs. The Freep Blasts GM...”


  • avatar
    Off a Cliff

    oi vey

  • avatar

    the compensation is irrelevant compared to the non performance. time to go Dan.

  • avatar
    DeadWeight

    11 million USD is only approximately 218 times the median U.S. annual salary/wage, and given how successful GM has been without having to resort to taxpayer assistance, and given that Akerson probably works a 8,720 hour week, what’s the big hoopla?

    I’m very much a believer in something at least reasonably close to free market capitalism (with an obvious need to minimize or eliminate extremely adverse externalities) even though free market capitalism is so far gone in our new era of Crony Capitalism & State Subsidization (that works quite well for the financial-banking/military/healthcare sectors) that it’s now nothing more than a quaint historical footnote in economics textbooks, but I’ll concede that the Germans and Japanese may be on to a better system (somehow, someway) when the CEOs of companies headquartered in their nations that are far more successful than GM are paid in accordance with a ratio more along the lines of 50 or 60 times what the median salary/wage is for an employee within their company is paid.

    The scariest part in this new Robber Baron era is that CEO/COO/CFO peeps at bailed out financial-bank firms with ties to the Federal Reserve Bank of New York look at Akerson’s salary and murmur “chump change.”

    Welcome to the New Normal!

    • 0 avatar
      28-Cars-Later

      Look at those and many of the political leaders with ties to leading firms (ie Goldman Sachs), its one extensive fiscal mafia.

      The late George Carlin said it best “It’s a big club, and you ain’t in it”.

    • 0 avatar
      Grahambo

      DeadWeight, you are dead on. It’s amusing that these ridiculous salaries are defended as manifestations of free market capitalism, when in fact they reflect nothing but cronyism and an entirely distorted market. And, further to your point about the compensation of German and Japanese CEOs, this sort of thing tends to make me even more likely to spend my money on a vehicle made by a company headquartered in Germany or Japan (although increasingly more likely to be manufactured in the US compared to many “American” vehicles) than I already was.

    • 0 avatar
      bd2

      Wow – CEOs overpaying themselves?

      Doesn’t hurt that they all “scratch each other’s back” by placing each other on the Board of Directors and Compensation committees.

      And let’s not talk about the ridiculous level of compensation via golden parachutes, even when they completely bomb and last only a few months.

      And as much as one can say that Akerson is overpaid, both Mulally and Ford, Jr. are overpaid significantly more so.

      Both Mulally and Ford, Jr. were paid over $26 million in 2010 – which was DOUBLE what Winterkorn (the CEO of VW) made (so the 2 together made 4x what Winterkorn made) and VW is more profitable than Ford, GM and Chrysler put together (and unlike Ford, isn’t billions of dollars in debt).

      And the BoD of VW just put into place a pay cut for Winterkorn despite VW continuing on its hot streak.

    • 0 avatar
      PintoFan

      The “era of free market capitalism” you’re talking about never existed anywhere except your imagination, and the imaginations of quite a few others on the libertarian right. If you think the markets today represent “cronyism,” then you haven’t really looked hard at any of the economic history of the U.S. before about 1970. The auto industry itself only exists in the form that it does because of untold billions in subsidies, most of which came right out of the taxpayer’s pocket.

      Most of the foreign companies you mention compensate their CEO’s at or near U.S. levels, they just don’t do it in cash. I seriously doubt Winterkorn is hurting for any VW stock options- same thing for Akio Toyoda and Dieter Zetsche. Of course, a lot of this has to do with financial regulations, which kind of runs contrary to the much-ballyhooed “free market.”

      • 0 avatar
        DeadWeight

        Everything is relative.

        You are stretching to claim I said things that I actually didn’t.

        When it comes to the concept or philosophy of capitalism based on free market forces & principles, we’re either closer or further from this concept today than we have been at prior periods in our history.

    • 0 avatar
      jimboy

      You all had a chance to vote these losers out of office last October, and the American public chose the same-old, same-old. Stop your whining, you got the government you deserve.

  • avatar
    WRohrl

    I think you meant “execs” in the headline. Unless, of course, your ex-wive(s) were also bailed out by Uncle Sam…

  • avatar
    mikey

    Yes, Buickman has once again summed it up in one sentence. I don’t for one second begrudge management compensation. As long aa its reflected in performance.

  • avatar
    gslippy

    Executives have an earned right to be well compensated.

    This problem started when GM sold itself into slavery to the government. Mr. Ackerson shouldn’t be reduced to begging for ‘appropriate’ compensation, but it’s a situation he helped produce.

    It will be better when the Treasury sells its shares, so we don’t have to see stories like this anymore.

    • 0 avatar
      DeadWeight

      It’s not as if Akerson didn’t go out, risk his own savings, start a company during a period fraught with risk, turn it into a highly successful venture, and shouldn’t reap the rewards of his risk-taking that paid off because he made many smart decisions.

      • 0 avatar
        Crabspirits

        (Claps)

        Just quit your job on the board at the phone company or whatever, get hired at GM, fleece about 50 mil over 5 years, and duck out/get fired.

        You don’t even have to do a good job.

        What a great plan.

        I mean seriously, when you make this kind of money, where is the fear of repercussions for failing? Or even to motivate you with the lure of a raise?
        “Awwww shucks! I got canned at GM. Guess I’ll just cruise around on the yacht for awhile. Jeanie, could you get Capt Stubing on the line?”

        They need to start looking DOWN for fresh meat.

    • 0 avatar
      sunridge place

      @gslippy

      I’m not a member of the Dan Akerson Fan Club (doubt one exists) but what the heck did he have to do with GM going bankrupt?

      How did Akerson ‘help produce’ it? He joined the board in July 2009 (after bankruptcy) and had nothing to do with GM before that date.

      • 0 avatar
        gslippy

        I didn’t mean he was associated with the bankruptcy. He joined the board as a representative of the US Treasury, and it was during this time the compensation guidelines were set.

        He’s known the rules for the last 3-1/2 years.

    • 0 avatar
      Kevin Kluttz

      I don’t understand your “earned right”. GM produced and still produces crap. Akerson owes US 11 million for the shit GM throws out. Even their POS Cadillacs look like Malibus. Exactly. Sonics with no brake pads and Cruzes with removable steering wheels come to mind. Also various gaskets that fail. And they want more money for throwing together the same crap.

      • 0 avatar
        DeadWeight

        I’m probably as harsh a critic of GM as nearly anyone, yet having been raised in GM country, with 2/3rds of my childhood neighborhood being populated by GM employees or employees of suppliers to GM, and having only driven or owned GM products of the mid to late 90s vintage during my high school years through my first year of college, I can honestly say that the quality and reliability of most GM products today is light years ahead of where it was then.

        My first car was a 2nd hand 1992 Pontiac Grand Am with a quad four engine for about 18 months that literally required repairs on a near monthly basis. It was a pile of shit.

        I’d even go further and state that many GM vehicles are now finished more nicely and close to if not equal to the quality of their competitors from Toyota or Nissan.

        Even considering all the mistakes that GM makes now, and the dysfunctional nature of its management team, the GM of today is a shining beacon of productivity, quality & efficiency compared to the GM of Roger Smith’s tenure, which was a very dark age.

        • 0 avatar
          DeadWeight

          I wanted to add (due to being too late to edit my comments above) that it wasn’t just myself that had a terrible 90s era GM vehicle, but that family members and friends who had GM vehicles of the late 80s to 90s era (I’m speaking of the dozens), as a rule rather than exception, had awful reliability experiences.

          I do recall a couple of exceptions, precisely because they were so few.

          And Roger Smith was one of the worst CEOs of any corporation of all time. I won’t comment on the politics surrounding his tenure, but I will state that he was almost hostile to the concept of encouraging or even allowing the engineers and the true “car guys” at GM to try to substantively improve the inherent quality of GM vehicles.

          He probably destroyed more of the goodwill of General Motors in a shorter period of time than did any other CEO of any other similarly large publicly traded corporation.

          Robert Stempel had a nearly impossible task to repair the bulk of the damage done by Smith; so much so, that many couldn’t help but pity him.

          And say what you will about Bob Lutz, and there’s no doubt he wasn’t without significant faults, but at least he actually took concrete steps towards putting a major emphasis on focusing attempts on the actual business of designing and building competitive vehicles, and he actually empowered the engineers at General Motors to the relative minimization of the bean counters.

  • avatar

    here’s who should be compensated…

  • avatar

    Just a part of the lie package. TARP
    was supposed to mean more jobs too. The sky is falling, the sky is falling. They shot the fucking sky out of the sky.

    They execs have got around the the few pay caps that were enforced with
    their huge stock holdings, and their insider info.

  • avatar
    Dave M.

    “It will be better when the Treasury sells its shares, so we don’t have to see stories like this anymore.”

    Let me finish that sentence for you:

    “and guides the corporation to repaying their loan from the government”.

  • avatar
    PintoFan

    Even if Akerson were to receive a raise, his compensation would still be in line with what chief executives at the other automakers are receiving. I’m not really an Akerson fan, and he might yet get replaced, but getting paid $11 million to run a company the size of GM (and doing it reasonably well, the endless griping of certain fanboys and writers notwithstanding) doesn’t really strike me as unreasonable. I must have missed the part where GM agreed to underpay managerial talent in perpetuity as part of the bailout.

    Corporate CEO’s are always easy targets for cries of “Overcompensation!,” but good managerial talent never comes cheap. I personally favor compensation packages that rely more heavily on stock awards than outright cash, but GM’s hands are somewhat tied regarding that at the moment.

  • avatar
    FAS

    Really?
    Can you name a car company whose financials look worse than GM who are owned more by a government? The point here is that GM is in the crapper financially, the american taxpayers are forever out about $20B and this guy has more take home pay than true performers in the business. If you aren’t angry, you arent paying attention me thinks.

    • 0 avatar
      DeadWeight

      I’m really torn on this, and I’m usually a “I have the absolutely correct opinion” type of asshole.

      On one hand, GM has a history of gross mismanagement for 30+ years, along with an intractable level of annoying arrogance even post-taxpayer rescue (that is laughable since one would only expect successful companies to even contemplate or allow for arrogance-seep).

      I’ve also been burned so badly by a consecutive string of GM products in terms of fail-reliability in the 90s that I swore off their vehicles for good and never looked back.

      On the other hand, every other auto manufacturer globally is subsidized by government, in varying levels of direct and indirect support, GM is a much larger employer of U.S. citizens than many financial firms and banking entities that received far larger taxpayer bailouts (and whom, arguably, produce nothing of durable benefit or utility that a manufacturer like GM does), and GM cars have become better and more reliable over the last several years (even some of GM’s harshest critics would be intellectually disingenuous to deny this).

      But these points are not directly relevant to Akerson’s current compensation nor alleged requested future compensation.

  • avatar
    stickmaster

    Some of the comments here prove that the hoi polloi in America will defend to the death their corporate masters, always believing that they must have “earned” their way to the top through old-fashioned hard work and honesty, and that surely these brilliant executives need even more compensation for sending the stock to infinity and rewarding us mere mortals with even more useless gizmos which will surely make us live forever.

    All hail the American CEO! All hail the American CEO!

  • avatar
    probert

    So lets see: you choose this topic because GM got a bailout loan that they’re repaying from profits of products sold. The loan saved 10 of thousands of jobs in the deepest part of a recession but that’s unforgivable.

    Meanwhile reports come out the the main perpetrators of the recession- wall street banks (estimated economic destruction equivalent to 20% of gdp) – have been getting – in addition to their huge bailout – and constant stream of taxpayer funding to the tune of about 90,000,000,000 dollars a year. Which curiously is about the same as their purported profits.

    11 mill is too much but harping on GM (and even complaining they don’t play nice with ttac) is, in the greater scheme of things, a bit petty.

    • 0 avatar

      Let’s not see anything. After the US sells its shares of GM
      about 35% will still be lost (I haven’t bothered to look up the
      exact amount, which will vary with current stockprices as the shares
      are gradually sold). How will the jobs be “saved” if GM continues to make shitty cars? And aren’t many of the jobs shit since a tiered
      pay structure is now in place for new employees?

      Of course it’s all small change to what the baron robber bank fucks
      have walked off with; no argument there.


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