Whatever happened to the $1 a year men? When the federal government gave Chrysler $1.5 billion to stay in operation, CEO Lee Iacocca worked for $1 until the taxpayers were received their money back.
GM disclosed that it will pay new CEO Ed Whitace, the former head of AT&T (T), $9.1 million in compensation for the year. His base will be $1.7 million. He will receive $5.3 million in stock beginning in 2012 and $2 million in restricted stock. It is a rich package by any standard, and is particularly generous for a man who has never been in the car industry.
Former GM CEO Fritz Herderson will receive $59,090 per month in consulting fees this year, it was also disclosed. He will advise Whitacre on international operations.
The two pay packages are particularly troubling not just because they are rich, but also because of the circumstances under which they are being paid. Whitacre strongly indicated that he would find an outside CEO when he pushed Henderson out. He gave himself the jobs instead. Now, GM will pay him a huge sum to run a company which is 70% owned by taxpayers. U.S. Treasury pay czar Kenneth Feinberg probably approved the package, but it is larger than those for many senior managers at banks which received government bailout capital. Put directly, Whitacre put himself into a job and will now be paid $9.1 million to do it at a time when the taxpayer may not get back the $50 billion that they put into the No.1 US car company.
It is also strange that Henderson should get a package at all. Presumably he was asked to resign by Whitacre and the GM board because he was doing his job poorly. Now, he will receive $59,000 a month to “advise”
The same day that Whitacre received his pay package, he said that GM was not making fast enough progress towards it profit and revenue goals. He said that so he may make more changes at the company, But, he has been Chairman of GM since June of last year. A great deal of the “lack of progress” can be laid at his feet. And, for that, he becomes on of the higher paid CEOs in America.
Douglas A. McIntyre
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