By on June 8, 2010

With a GM IPO in the fourth quarter of this year looking more likely than ever, GM has revealed just how much its top management stands to gain from the automaker’s post-bailout share offering. Based on trading of Motors Liquidation bonds, which GM will convert into stock and warrants, a JP Morgan Chase report pegs the company’s value at $70b. Based on yesterday’s bond trading prices, however, BusinessWeek estimates new GM’s value at $48b. With a float of 500m shares planned, that puts GM’s current stock price at about $96/share. With that in mind, let’s take a quick look at GM’s planned executive stock compensation.

The Detroit News took a look at GM’s SEC filings, and reports on the following stock compensation packages:

Chairman and CEO Ed Whitacre: 24,547 shares of salary stock. ($2.36m at $96/share)

• Vice Chairman Steve Girsky: 18,063 salary stock units. ($1.73m)

• Chris Liddell, vice chairman and chief financial officer: 15,979 shares of salary stock ($1.53m). His compensation package totals $6.27 million, $900,000 of which is cash.

Tom Stephens, vice chairman of global product operations: 50,521 shares of restricted and salary stock. ($4.85m)

• Tim Lee, president of GM’s international operations: 25,440 shares of restricted and salary stock. ($2.44m)

• Nick Reilly, president of GM Europe: 31,438 shares of restricted and salary stock. ($3.02m)

Mark Reuss, North American president: 25,104 shares of restricted and salary stock. ($2.41m)

• Mary Barra, vice president of global human resources: 12,957 shares of restricted and salary stock. ($1.24m)

• Selim Bingol, vice president of communications: 258 shares of salary stock. ($24,768)

• Vice President and Chief Information Officer Terry Kline: 12,959 in restricted and salary stock. ($1.24m)

• Vice President Michael Millikin, legal and general counsel: 19,142 in restricted and salary stock. ($1.84m)

• Nick Cyprus, vice president, controller and chief accounting officer: 19,002 shares of salary stock. ($1.82m)

In short, your bailout of GM is going to make more than a few millionaires… assuming these guys aren’t all there already. Say what you want about Rick Wagoner, at least he was willing to work Iacocca-style for a dollar a year… although that would probably still qualify as overpayment relative to services rendered.

In any case, what say you to these compensation levels? And how about the stock valuation? I

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30 Comments on “New GM’s Executive Compensation Revealed...”


  • avatar
    Contrarian

    Govt work always does have the best benefits.

  • avatar
    psarhjinian

    Say what you want about Rick Wagoner, at least he was willing to work Iacocca-style for a dollar a year… although that would probably still qualify as overpayment relative to services rendered.

    It’s easy to say you’ll work for a dollar a year if you’ve been making millions of dollars per year in prior years, all while you were destroying tens of millions of dollars in value. In those terms, this management team isn’t bad at all, what with their actually showing some progress.

    And before we harp on about government benefits, recall that, in fat times, private upper management is compensated several orders of magnitude greater than public management ever could aspire to with even less responsibility to their base (the shareholders). Take Bob Nardelli: Home Depot gave him a quarter-billion dollar Dear-John. Directorates do similar things all the time, regardless of what shareholders want.

    • 0 avatar
      dlfcohn

      Sadly, gov’t jobs generally are all salary, no share options, warrants to buy or convert securities etc.

      The thing I don’t get is this. Why did they have to pay any of these people anything at all above a base salary? Gov’t (doesn’t matter which country) always seems to overspend when it brings in corporate talent to deal with a situation.

      If I were recruiting folks to take on the New GM, I probably would have made this pitch.

      Here is what the Gov’t is offering you, a small salary and a chance to become a legend in the business world. If you succeed you will be so in demand you will be able to write your own ticket for your next gig, or if the new privatized GM decides they want to keep you.

      That sort of challenge would have cleared the decks of all the various time-servers faster than Ed W.’s big broom eventually did and gotten some serious entrepreneurs into the right exec. jobs a lot quicker. It also would have saved the tax payers of the US and Canada a lot of $$$.

      Cheers

    • 0 avatar
      threeer

      psar, thanks for the post. I slowly tire of the “government worker” slams that come this way all too often. Yes, I am sure there are numerous federal employees that bilk the system. Just as I am sure there are as many that bilk private companies. At most management levels, private industry STILL handily outpays what we earn (yes, full disclosure…I am one of those “overpaid, underworked” government types). I get paid less than my private industry counterparts, and enjoy the added extra benefit of travelling to exotic locations where there is a good chance part of my day (if not all) is spent in full body armor and the occasional run to the bunker for quality time with the rest of the soldiers/government types that also had the privilege of going to one of two fun sandboxes…

      As for the compensation listed here…for major corporation compensation, it really doesn’t appear to be that far out of line. The key is “tied to performance.” Does that mean if stocks really don’t sell at the projected price point that they’ll earn that much less? It’d be nice to see them actually have to make the company, you know…PERFORM…in order to get paid decently. Time will tell…

    • 0 avatar

      threeer
      threeer
      June 8th, 2010 at 1:12 pm

      psar, thanks for the post. I slowly tire of the “government worker” slams that come this way all too often. Yes, I am sure there are numerous federal employees that bilk the system. Just as I am sure there are as many that bilk private companies. At most management levels, private industry STILL handily outpays what we earn (yes, full disclosure…I am one of those “overpaid, underworked” government types). I get paid less than my private industry counterparts, and enjoy the added extra benefit of travelling to exotic locations where there is a good chance part of my day (if not all) is spent in full body armor and the occasional run to the bunker for quality time with the rest of the soldiers/government types that also had the privilege of going to one of two fun sandboxes…

      If you’re paid less than private sector counterparts, you’re in the minority. On average, federal non-postal non-military employees are paid more than twice what people earn in the private sector in terms of total compensation, over $100K a year. Even putting aside the generous benefit package that includes benefits simply not available in the private sector, federal employees still are paid more in salary than people in the private sector. While it’s true that a small number of jobs like attorneys or CDC scientists could earn more in the private sector, when analyzed on a job by job basis, the vast majority of federal employees still are paid more than their counterparts in the private sector. Even government janitors make twice what private sector janitors make.

      Frankly, I don’t see that many federal employees feeling any of the pain of the current recession. Have 10% of federal employees been laid off? On the contrary, federal employment has increased and all of you got your “merit” increases. In 2008, out of 1.8 million federal employees in the GS system, only 400 didn’t get in-grade increases – increases that are theoretically merit based.

      Also, I note that while you resent some of the conditions of your job, your comment has not a word of gratitude towards the American taxpayers who feed you.

    • 0 avatar
      YZS

      Ronnie, the taxpayers that feed him? Are you serious? How about him (and millions before him and like him) putting his ass on the line so the rest of us can live in the best country in the world? I for one, am glad that there are still people who choose to serve their country.

    • 0 avatar

      YZS, he’s not military, though he may work for the DoD or State if his job involves travel to Iraq and Afghanistan.

      I’m just tired of every federal employee making it sound like his or her job is 100% mission critical. Every single one insists that they are underpaid compared to the private sector, but someone the averages say otherwise.

  • avatar
    mikey

    I read the piece,and the words “tied to company performance” jumped out at me.

    • 0 avatar
      KixStart

      Tied how? And to what performance measure?

      GM claims they made a billion or so in profit. How? They’re sitting on a pile of Federal cash; that billion could have come from anywhere and may not be at all relevant to sustained performance or growth. I don’t recall all the details of their recent report but, for example, I noticed a fantastic amount of “goodwill” on the balance sheet, which seems vanishingly unlikely considering the number of people muttering darkly about “Government Motors.”

      It sure smells like a cash grab to me.

      Management can make a good living, for a while, hollowing out a company and the workforce pays the price while management points to short-term “profits” that are really the life of the company draining away. The trick for management is to bail before it becomes too obvious. And if things don’t go well and they mis-time their jump, they’ll still have a tidy sum squirreled away and the old boy network is still likely enough to pick them up and install them as CEO elsewhere.

      GM has collapsed before. Who’s to say it isn’t happening again?

  • avatar
    dhathewa

    Why don’t they pay them in certificates good only at GM dealers? TTAC regular “mikey” got something like that. What’s sauce for the UAW is sauce for the CEO, no?

    • 0 avatar
      mikey

      Yes I did,and my gleaming, meticulosity detailed, Black Impala LTZ sits in my driveway. But its the monthly pension deposit that concerns me more.

      My opinion differ’s from my union brethren, in the area of salary compensation. I don’t care what they pay them,provided, such compensation, is indeed tied to “company performance and personal performance. In the GM that I worked at,this was not always the case.

      From what I’ve seen or read about the “new” GM, Mr Whitacre doesn’t believe in rewarding, poor performance. Or for that matter,keeping them on the pay roll

      Quality people, cost quality money. If thats what it takes to keep my pension alive..so be it.

  • avatar
    Geo. Levecque

    I guess with the recent Recall of some GM vehicles, a lot of top management screwed up somehow eh? By paying each
    Customer a $100.00 it will cost GM over One Million and a half dollars of Taxpayers money, so where is the Profit eh?

  • avatar
    Geo. Levecque

    When Mikey retired here in Canada, the vehicle he got was part of his retirement package, and I would think it was in lieu of extra cash!
    The Impala model needs to be replaced, it’s a old design and way past its Prime. The current Lemon-Aid book rates the Impala as Below Average, it rates the Impala on par with Chrysler’s poor performers! enough said!

    • 0 avatar
      mikey

      Geo…. Couple of facts, dude. The “car voucher” was part of the package. There was nothing “in lieu”

      As far as the Impala goes, its GM’s top selling car. See what Michael Karesh has to say about it. Dollar for dollar the Impala is on of the best on the market today.

    • 0 avatar
      NickR

      Mikey, before we get started just let me say I hope you were joking about reading the ‘Red’ Star in another post. I’ll give up on you if you do that.

      The lack of a connection between pay and performance was not unique to GM, that’s for sure. My experience in a completely different industry is, in retrospect, almost comical in that regard. At least now they are saying that’s what they are going to do…maybe it will end up being lip service, but hopefully not. Like you say, if they keep the company going and are richly rewarded, so be it.

      As for the Impala, I am going to say this one more time. It is exactly the kind of cr bread and butter car that GM should thrive on. Decent looking, reasonable balance of power and economy, favourable pricing, not fancy materials but well screwed together. When GM did those things right in the past, they sold a s***load of cars.

      Lemon Aid? Way too reliant on anecdote for my liking.

    • 0 avatar
      toxicroach

      I spent last week in an Impala rental, and I was fairly impressed. Big trunk. Decent power. Pretty comfy. Could have used a wee bit more ergonomics re: dash plastics and my leg, but other than that a very solid highway cruiser. It’s the kind of sedan they would sell at Wal-Mart as the top of the line, which I mean in the best possible way. I see why people prefer it over the Bu.

  • avatar
    Rod Panhard

    Hey, don’t forget, VEBA wants their money too!

  • avatar
    werewolf34

    Where exactly does Automotive mgmt talent go if they feel they are underpaid?

    I.E. why pay VPs over 1MM each if there is no risk of losing them?

  • avatar
    jkross22

    Does anyone know if there’s a window of time post IPO that the stock holdings cannot be sold? I worked for a company that went public and prevented me from selling the stock for 6 months after the company went public.

  • avatar
    LennyZ

    “tied to company performance” is all carrot and no stick. What happens if stock price goes down? Do they give money back? How much money was paid out based on performance to executives who ran the company into the ground. In the long term the stock performance was piss poor but executives still cashed in.

  • avatar
    mtymsi

    The best thing about a GM IPO is money to pay back the feds something I’m certain we are all in favor of.

  • avatar

    If you’ve got a good horse…give him another bale of hay.

    GM needs talented leadership. These people certainly are capable of earning higher incomes elsewhere, sort of similar to parochial teachers who are more dedicated than greedy. Yes, many have lost and suffered through the demise, but if we don’t retain and attract competent management, even greater losses will occur.

    Incentivizing thru stock makes a whole lot more sense than simply writing a check.

    Side note to those critical of Big Ed…think he’s in an easy chair? I have some disagreement with some stuff, but on the whole he’s doing fine. He gets out there like Perot, questions things rather than accepting status quo, demands performance, isn’t afraid to make a decision, and is definitely in charge. He’s probably a better CEO than Chairman.

    Mr Ed and Wilbur (not Ross)

    http://www.usatoday.com/life/gallery/animal-actors/mr-ed.jpg

    • 0 avatar

      Buickman,

      Have you tried to get AT&T to perform any customer service?

      AT&T doesn’t just provide poor customer service, they provide the illusion of service, an imitation of service, and they’ve obviously cut back on the technical side of things too, based on the timeouts I’ve been having since their servers blew up two weeks ago.

      My experiences with AT&T make me think that Whitacre is the wrong person to head a company that needs to assure its customers that it actually cares about them.

    • 0 avatar

      I see no “good horses” in executive positions at Gov’t Motors. Certainly no one who deserves to be made a millionaire on the backs of the taxpayers whose money was wasted keeping this company — and the UAW — around.

      Further, each and every one of GM’s current management is likely unhireable at any other automaker. (With the possible exception of the new marketing guy; then again, anyone with a pulse is better than D’oh!erty.)

      And having Gov’t Motors on your resume isn’t a positive. Didn’t they hire a guy from Ford who later quit inside of a week? Do you recall the difficulty GM had with hiring an outside candidate for CEO? No one (except for Whitless) wanted the job!

    • 0 avatar
      mtymsi

      I think AT&T has excellent customer service especially compared to Comcast my former TV/phone/internet provider. I have had AT&T at my house within two hours of calling and they promptly answer instead of Comcast’s 30-45 minute wait when I do call. Given my experience I’m actually surprised you haven’t received satisfactory service from AT&T.

      As regards Whitacre, somebody that got rid of LaNeve, Henderson, Lutz and removed Doucherty from her former position gets my vote of confidence for moving things in the right direction.

    • 0 avatar
      psarhjinian

      @Ronnie,

      That’s not an AT&T thing, it’s a telco thing. They’re all like that, regardless of who, where or how much. I’ve done telco relations on four continents and they all suck. Deutsch Telekom/T-Mo? Awful. Bell Canada and the other Stentors? Wrteched. AT&T? Verizon? FairPoint, Charter, Sprint/MCI? Please. Telstra? Barf.

      I have encountered exactly two telcos that don’t completely suck: MTS/Allstream and NT&T. That’s it. Every other one has acustomer service, support and technical execution level doesn’t just scrape the bottom of the barrel, but busts clean through it.

      One of the shining reasons I’m anti-corporate is ten years of my professional life spent dealing with these….

  • avatar
    threeer

    Ronnie,

    Quick note of rebuttal…I never mentioned any resentment for what I do. Quite the contrary…I worked 20 years to get to this point to have the privilege of working alongside our military, even in combat zones. As I couldn’t serve active duty, or reserve (medical DQ), this is the best way I know how to interact with our soldiers. Am I grateful? Hell, yes. Getting paid twice what I was getting paid in the private sector? Hardly.

    But this is supposed to be a discussion revolving around GM management compensation. I hope they stick to offering them a set # of shares, regardless of IPO price. That way, if GM really does well, so do the shareholders (and then nobody should have too big of an issue with whatever the management makes based on the share price). However, if things get manipulated and they earn the same dollar amount for less shares, then I’d call foul. We’ll see what happens when GM does go IPO.

  • avatar

    personally speaking, can’t stand ATT. been lied to and jerked around, will never do business with them even if they offer free service. same goes for Sears.

    that aside, GM does have strong horses in management. like Stephens, Reuss, Hresko, Welburn, Peper, and now Ewanick.

  • avatar

    Am I missing something here? How could JP Morgan claim they are worth $70 billion?!?!?! Pre-bankruptcy they were only valued at $40 some billion right? What has happened to almost double the company’s value? If anything they should be worth much less now since they shed brands, plants, and other assets.

  • avatar
    Invisible

    Sorry,

    Every effing penny from the GM stock should be returned to the taxpayers.

    Those corrupt executives that ran GM into the ground don’t deserve a penny.

    WE, the tax payers are still paying to clean up after the mismanagement of GM.

    http://detnews.com/article/20100519/AUTO01/5190378/Feds-devote-$800M-to-clean-up-abandoned-GM-sites

    So the executives and Obama are pulling a fast one here. The “OLD” GM is still milking the taxpayers to pay for the bad decisions all those executives made. Just last month in the above link, we are being milked for ANOTHER 800 million to clean up after these crooks.

    Now these crooks are lining up to milk us out of millions in stocks.

    BOYCOTT GM.

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