Planes, pain and auto executives

Posted by: David Welch on November 21, 2008

With all of the hoo-hah over corporate aircraft flying about, let’s take a look at the cost. It does add up to some big bucks. Big companies have to report the price tag for the corporate planes and other perks that they give to their executives. Last year, Ford CEO Alan Mulally racked up $752,000 for use of the corporate plane, which his family also gets to use to ferry back and forth from their home in Seattle, according to Ford’s proxy statement. Last year, Mulally’s perks that fall under “perquisites and other personally benefits” added up to almost $1 million. Mark Fields, Ford’s executive vice president-Americas, spent a comparably little $29,000 flying commercial aircraft to his home in Florida. And by the way, last year Ford paid almost $300,000 to Pentastar Aviation for corporate use. That company is owned by Edsel B. Ford II, Chairman Bill Ford’s cousin and a board member.

General Motors paid out a pretty penny for executive air travel, too. GM’s proxy says that Chairman and CEO Rick Wagoner cost the company $45,000 in personal air travel. President and COO Fritz Henderson’s bill was $21,000 and Vice Chairman Bob Lutz globe trotted to the tune of $190,000. In all, GM spent $675,000 on personal air travel, security and other perks for its top three executives last year. That is real money.

But let’s stay grounded on the subject of company planes. There are legitimate reasons for having them. Executives are starved for time and if the companies are global—and these two automakers truly are—the top brass are required to fly all over the globe to meet a battery of meetings. Waiting hours in a terminal is not a good use of their time. Security is also a real issue. Most Fortune 100 companies use private aircraft of some kind.

The issue is how the planes are used. Do top executives need to gas up the corporate plane to fly to Washington D.C.? No, especially if they are going on a mission for government help. The elitist image it broadcasts is why the executives are getting hammered over perks and pay today. Do they need it for personal use? Not if they’re losing this kind of money. They simply have cut to perks everywhere—even if the impact of the cuts is more symbolic than financial—to show that they are getting lean and turning over every stone to conserve cash. Congress sent its message loud and clear: The government and tax payers do not want to underwrite largesse to executives and even the rank and file. GM has cut its fleet from seven planes to three. Maybe they will set limits on who has access and why they use them. In this environment, they’re going to have to if they want Congress to think that they are serious about getting lean and saving every penny.

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Reader Comments

Micahel D. Baudry

November 21, 2008 08:06 PM

Have they ever heard of "teleconference"?

PacificGatePost

November 22, 2008 01:54 AM

Planes? Right. That will do it.

A BAILOUT PLAN

Here is the type of plan Congress should consider >

http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

Trying something outside the box like this, is the only way to save the U.S. Auto Industry.

There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW. ... and they actually "make" something, .... unlike Wall Street. Detroit deserves saving.


Paul (Vw)

November 22, 2008 09:22 AM

Mr. Welch...very clever title.

I agree with you on this.

The president has his own plane for a few reasons: he has limited time, scheduling issues, and security for starters.

Likewise the same is true for executives of massive corporations with far flung operations.

But again...this is what happens when you have executives and unions who drive corporations into the ground and come to Washington looking for a handout. You have to expect that congressmen will be congressmen and want to put on a show.

flyerbry

December 3, 2008 10:00 AM

I see it as a case of the "pot calling the kettle black"...

Look at our national deficit that was spiraling out of control long before our current economic downturn.

I bet if the politicians in Washngton and the various states using prvate jets were all required to use public transportation until our national deficit made a reversal they would start making more economically responsible decisions!

The fact that people aren't buying cars is an economic problem and for that the politicians share the blame. The fact that they are pointing fingers at the executives from the car companies is a feeble attempt to take themselves out of the spotlight.

No such finger pointing took place when they bailed out the banks and they did that without any of the stipulations that they are putting on the auto companies. They need to start thinking through their actions and focusing on the real problems.

GM was in fact getting its act together before the economic downturn. They rehashed their contract with the UAW so for the first time in years they could somewhat compete with the foreign competition. Every completely new car brought out by GM the past couple of years has been a winner and Ford is currently topping the quality charts!

It's simple, if a manufacturer can't sell their product they can't stay in business. The auto companies aren't the only ones affected - folks in non-automotive related careers are losing their jobs too!

Hagadorn Wexner

December 18, 2008 11:54 PM

All you need to do is have a candid conversation is a few corporate pilots and you'll learn more than you can imagine. They love to talk off the record. A few examples that come to mind... A thousand mile trip from Ohio to Flordia to pick up the wife's favorite slippers she forgot to pack... AEP (American Electric Power based at KCMH shelled out millions more because they couldn't wait and pushed to get their Falcon Jet sooner... BBJ's with only 4 people on board -counting the Pilot and Copilot. You'd be surprised what you can learn at you're local airport.

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Want the straight scoop on the auto industry? Detroit bureau chief David Welch , Dexter Roberts and Ian Rowley bring daily scoop, keen observations and provocative perspective on the auto business from around the globe. Read their take on such weighty issues as Detroit’s attempt at a comeback, Toyota’s quest for dominance and the search for an efficient car.

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