Wagoner ($15.7m ) and Mulally ($22.7m) Bank Big Bucks in '07
If the Board of Directors at GM and Ford want to pay their CEO a billion dollars a year to [s]run their companies into the ground[/s] facilitate their turnaround, far be it for me to tell them they should do otherwise. But if you're looking for a reason why these two automakers are on an engine out terminal approach, clock those annual pay packages and remember that they are the tip of the iceberg of over-paid unaccountability. Add in the rest of their executives' compensation and you have a culture of entitlement that makes Moctezuma's priests seem like chimney sweeps. The info [via The Detroit News] raises at least two important questions. First, why were we thinking that GM CEO Rick Wagoner earned $14.4m last year ($1.3m less than today's report)? Second, what was all that about Ford CEO Alan Mulally's pay being front-loaded to account for the fact that he left Boeing behind? Big Al's '07 $22.7m comes after last year's $28.2m. I make that $51.4m for two year's work. There are lot of other ways to crunch those numbers, as even the DetN feels it must. Wagoner's 64 percent rise "followed the posting of a $39 billion loss in 2007, a year when GM's stock price fell by about 19 percent, without adjusting for dividends." The DetN forgets to provide the same info for Ford. FYI FoMoCo lost $2.7b ($3.5b in NA) in '07 and their share price dropped 10.4 percent. Nardelli? Chrysler? That information is privileged…
You know, I can excuse Mulally's salary. He was hired--headhunted--from another company. They wanted him, they bought him. Overpaying for Alan Mulally's services is like paying a "market value adjustment" for a nice car; it may not be smart, but it was the going rate at the time. Wagoner, on the other hand, was promoted--several times--within GM to his current position. Someone looked at his past career and actively decided (several times, again) that he was worth this. Paying for Rick Wagoner is like re-leasing a car that you'd leased for three years already, had serious problems with for it's tenure. In other words, it's a colossal failure of judgment.
@Droid800 Actually, sir, the recent vote was not for tying his pay to GM's performance but his stock option awards. That's only a portion of his overall compensation. Another defeated proposal was to give shareholders an "advisory vote on executive compensation." Whom would the vote advise? The BOD Executive Compensation Committee. Communists are fond of committees, too. Who knows why it was defeated. Perhaps shareholders were influenced, their votes not counted correctly, or they felt an advisory vote wouldn't matter. After all, one purpose of the GM Board is: "The Board has the responsibility to ensure that in good times, as well as difficult ones, management is capably executing its responsibilities." That's from GM.com. How long has Wagoner been CEO and what is track record?
Buickman, At the risk of defending Wagoner (I know, heresy) Japan is extremely protectionist in nature, spirit and deed. Japan may not have explicit laws protecting its home market or home teams, but it's understood implicitly that you make life very difficult for foreign competition. Besides, what rational Japanese consumer would seriously pick a Chevy over a Toyota? We don't even do that in Chevy's home market.
I also agree that I see no evidence that Mulally is "running Ford into the ground." And he came on too late to really affect the new Focus. factotum: Actually, sir, the recent vote was not for tying his pay to GM’s performance but his stock option awards. That’s only a portion of his overall compensation. Aren't stock options a significant portion of the total pay package? It is my understanding that stock options, more than actual salary, are what's really driving up executive pay.