Big 3 Automakers and Executive Compensation

Have they lost their minds? Well, at least their sense of propriety …

In a move reminiscent of AIG’s post-bailout bacchanalian (or, as the Smoking Gun crudely puts it, “Rock out with your Bailout”), representatives of the big three automakers admitted to having taken private jets on their groveling crusade to Washington.

Under questioning by Rep. Gary Ackerman (D-Queens), the CEOs assured Congress they had tightened their belts, cutting hundreds of workers and closing dozens of plants. “Obviously we’re all slashing back every expense that’s not critical to the business,” said GM CEO Rick Wagoner.

Right. On the same afternoon, Wagoner and Ford CEO Alan Mulally refused to consider taking a paycut from their respective $15.7 million and $22 million salaries to $1, a symbolic gesture suggestive of Lee Iacocca in the 1980s. Keep in mind that CEO compensation generally includes perks other than salary, such as bonuses, stock options, and . . . use of private jets.

Just another sign of the times – perhaps a change in the collective corporate mindset is just coming surely, but slowly?

NB – Chicago-Kent is offering a class on Executive Compensation in Spring 2009.


6 responses to “Big 3 Automakers and Executive Compensation

  1. I wonder how much their other perks (besides salary) are? I bet they are way more than what is necessary for them to maintain a high class life style.

  2. If you click on “perks,” you can see Wagoner and Mulally’s 2007 compensation.

  3. Blame the people that gave these executives contracts that are not tied to long-term performance; not the executives that were lucky enough to get them.

  4. UPDATE: GM giving up 2 of its 5 corporate jets – financial crisis averted.

  5. Executive compensation isn’t the major problem with GM and Ford. It’s merely a smoke screen to divert attention away from the real problem – which is the UAW.

  6. Rick Wagoner on the suggestion of reducing his salary to $1 million per year: “I really hadn’t thought through that yet. I do have a son in college I have to pay for somehow.” (

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