GM execs: No pay cuts for me

Posted by: David Welch on January 13, 2006

When Jerome York—whose boss, billionaire Kirk Kerkorian, owns 7.8% of General Motors—made his heavily-anticipated speech on Jan. 10 suggesting how GM could turn things around, he made a few unpopular suggestions. Among them: GM’s top five execs should take a pay cut. They collectively make $7 million. Cutting pay would send a signal to the union that everyone must pitch in to save GM, and that management isn’t too elitist to share the pain.

The idea isn’t going over well. Vice Chairman and CFO Frederick A. “Fritz” Henderson said GM execs have already lost their bonuses, which amounts to a pay cut since a big part of compensation comes from performance incentives. In Henderson’s eyes, GM has already made good on York’s recommendation. GM Vice Chairman Robert A. Lutz told the Detroit News that he isn’t keen on the idea, either. His bonus has disappeared, cutting a big part of GM executive compensation. He says executive salaries are like professional athletes’ salaries. You must pay up for talent.

York’s response? He says rank-and-file factory hands don’t have a lot of sympathy for cuts in bonuses. GM must cut executive salaries to get the union workers and leaders to feel and “equity of sacrifice.” It looks like this will be akin to asking Congress to vote to cut their pay. When it comes to York’s prescription for GM, “there are definitely some disagreements,” says one GM exec. We may be headed for a standoff.

Reader Comments

sickofexecs

January 16, 2006 4:39 PM

Generally execs are overcompensated and their abilities and accomplishments are overrated. They take credit for successes and pass the buck for failures. GM's execs are no different from the rest of the pack. The real work, ideas, and solutions lie in the trenches with the stifled, disenchanted grunts. GM's leadership if you can call them that should step up and lead by example....take a pay cut...skip that trip to Aruba.

Tim

January 31, 2006 6:36 PM

Hi, Being the automotive (grunt) worker that I am and trying to save money for general living payments, college money for the kid, and one movie a week. I sure wish someone else could smell the muddy soil in the trenches. Financial status and personal gains are different when making billions, millions thousands, and lastly hundreds. Retirement has been taken out of the dictionary for the average grunt. Damn what happen to the American dream? It's either super rich or super poor these days. Wake up America! Our forefathers didn't invision the Japanese and now the monsterous China economic vacuum. Does greed cloud future visions for the furture. Sure looks like it did. Case in point. We are only starting to seeing the demise of our dear country. Ultimate greed blinds and distroys future prosperity. God, please grant us leadership that thinks of the majority, the future, and not the flash in the pan rich minority.

rich

March 26, 2006 1:42 PM

The people run GM and Ford have failed. Failed their stockholders,worker and their country.
In the real world down at the plant and office levels this type of performace is rewarded with a pink slip. When is the last the leaders of a company that lost 10 billion (GM) doing a good job.

Kimmer

February 26, 2008 3:25 PM

I have driven American made cars for 25+ years - Unless these execs get their packages under control I most likely consider something else - say...a Toyota ~ when I replace my current vehicle.

The American vehicles do not fit in the garage of the newer homes. My husband could not replace his 2002 Tahoe with another one because the new one did not fit in our garage. We live in middle class USA neighborhood - 3' wide car - 3- wide garage... Am I the only person who sees this as being pretty basic?

In was reported in April 2007 Ford CEO Alan Mulally earned himself a cool $28.2m. - http://www.thetruthaboutcars.com/editorials/ford-death-watch-30-executive-compensation/

GM's chief executive, Rick Wagoner will take a 50 percent cut in his $2.2 million annual salary. Three other top executives — the chief financial officer, Frederick Henderson, and two vice chairmen, Robert A. Lutz and John Devine — will have their salaries cut by 30 percent. BothLutz andDevine have contracts with GM that expire at the end of this year.

http://www.businessweek.com/autos/autobeat/archives/2006/01/gm_execs_no_pay.html

Toyota Motor Corp., the world’s biggest automaker by market value, will increase the total amount of executives’ bonuses by 33 percent for the year ended in March after the company posted record earnings. The automaker will pay a total of 970.5 million yen ($7.8 million) in bonuses to its top 32 executives, including President Katsuaki Watanabe, for the previous fiscal year, it said at its shareholders’ meeting.
Toyota’s 32 top executives received just over $12 million in salaries in the 12 months ended March. Lets see Toyota made something like $13,000,000,000 in profits. With the top 32 executives getting about $20,000,000 that is .15% of earnings. Even if there are some other benefits not included in the total that .15% figure for the top 32 executives doesn’t really compare to ludicrous pay of many CEOs in the USA. They are in a different paradigm than the others. I think their paradigm is much more effective (and the pay is the symptom of that system). I’ll take the executives of Toyota over the overpaid executives any time.

http://management.curiouscatblog.net/2007/06/23/no-excessive-senior-executive-pay-at-toyota/

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