GM Seeks Pay Leeway From Treasury
GM CEO Dan Akerson may believe that
There’s more to life than money,
but he tells the Freep that GM is running the risk of losing top managers to the competition, and must seek more flexibility on pay rules from the Treasury. Akerson wouldn’t clarify what kind of concessions he’s asking for from Treasury, but says that the risk of losing employees in the short term is very real. Meanwhile, even though the government isn’t the majority stakeholder in GM any longer, it will have to OK executive compensation packages until the bailout is paid back. Which prompts The Atlantic‘s Daniel Indiviglio to suggest
there may also be ways to structure pay to minimize cash in compensation packages. For example, if a large portion of compensation is awarded in GM stock that does not vest until the company has paid back the bailout, then this would provide additional incentive to these executives and limit their immediate cash compensation. Unfortunately, there’s no perfect solution to this problem, because the government shouldn’t be involved in the business of bailouts in the first place.
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"...running the risk of losing top managers to the competition" I really doubt that other manufacturers are chomping at the bit to hire anyone with "General Motors" on their resume'.
Dan Ackerson is right - you don't just hire anyone to do the job an automaker's top executives have to do, and you don't retain such people just by being nice to them. Yes, perhaps some compensation can take the form of stock options vs. cash. But I'm unclear as to why the compensation decisions can't be made by the Board of Directors, particularly now that the government is a minority - albeit large - stakeholder. If the government has a stranglehold on compensation packages until the bailout money is repaid, the GM really is at great risk of losing its top managers, with little ability to replace them. And I don't go in for the populist class envy viewpoint that these managers should be starved, or that they 'make too much'. Those who feel that way should stop paying to see professional sports events.
My financial services company employer, with operations in 13 countries, is proud to describe itself as the premier employer in financial services, targeting the best and brightest employees in the whole world. Again, the premiere employer, it also carefully targets the 50% mark for regional average financial services compensation, reset annually. Stock tanked 2 years ago and stayed down when structural issues were visibly inescapable to wall street. How does this help the GM situation? I am quite sure his HR people are on board with this. They can come up with statistics showing GM is below average and needs to keep its world class talent. I am not actually complaining, I got a +4% reset this year, prior to ?% performance raise, and I do get paychecks every 2 weeks. Modern HR braggadocio is simply odd when taken at face value.