General Motors' executives took a massive pay cut in 2005, after the board of directors not only voted to withhold bonuses, it also slashed base pay of some of the company's highest profile executives.
Among them, chairman and chief executive officer Rick Wagoner took a 46 percent hit to his bottom line, from $10.1 million in 2004 to $5.5 million in 2005. Vice chairman and head of product development Bob Lutz took an even bigger percentage hit, and will take home $3 million this year (he raked in $6.5 million in 2004). John Devine, former GM vice president and CFO banked $3.9 million, down from $6.4 the year prior.
Wagoner's salary of $2.2 million didn't change in 2005, but he as part of a round of voluntary pay cuts this past February, the top executive will see his base number cut in half.
The figures came from GM's federal proxy report issued Friday, which sets the table for discussions at the upcoming June 6 shareholder meeting. Among other things, investors will vote on six proposals, one of which calls for the repayment of executive performance bonuses awarded based upon faulty earnings reports (before accounting corrections forced a restatement). The board reportedly discounts such suggestions, arguing that antifraud legislation and rules already in place render such changes unnecessary.
Other shareholder ideas to be floated at the meeting include splitting the offices of chairman and CEO, banning the issuing of further stock options to GM employees, altering voting practices for the board of directors, and a call for a new report on the company's effect on global warming.
According to reports, the board opposes all of the above.
[Sources: The Detroit Free Press; General Motors]
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Reader Comments (Page 1 of 2)
Scott Eaton @ Apr 30th 2006 7:10PM
Until Ford, GM, etc. are in the GREEN, no exec at any level should be paid for than $150,000/year and i'm being generous!
Scott Eaton @ Apr 30th 2006 7:11PM
I meant "more than" sorry.
Tom W @ Apr 30th 2006 7:20PM
Boner hidin' ass-grabbin' pocket pool at it's best.
Jeff Gilleran @ Apr 30th 2006 7:24PM
I have to agree.
If your company is in dire straits you dont continue earning "millions" while your company is still in hotwater.
Im sure these guys could live with $150,000 a year happily.
I also think they should have their wages proportionate to how much money the company is earning as with most other automakers.
Thats fair, predictable, and contributing to the health of the company by promoting goal setting and a desire to make more money through job performance.
Sounds like a healthy way to go in my opinion.
RayRay @ Apr 30th 2006 8:01PM
First #3 doesnt make any sense- is it one of those under-educated GM consumers.
Anyway, GM Execs are well off, they should adopt a more mature outlook for the business- much like Lee Iacocca did during the Chrysler turnaround ( a salary of 1 dollar). Worst of all these morons are being rewarded for their bad decisions which resulted in not having the right products out, and not developing a proper pricing scheme.
The worst of it, is that they are destroying peoples lives (salaried and hourly employees) through layoffs.
GM is the next Enron- its written all over the place.
Beanspants1 @ Apr 30th 2006 8:07PM
$150 is too low. director-level mgmt (mgmt employee -> mgmt employee boss -> director) earns in the range of $150 and way up in most companies. lots of these type jobs are relatively consistent across many corporations (they could leave GM and go to Oracle or Boeing or Microsoft for example), so they'd leave for another company if their pay got slashed, and GM would be left with the dregs.
$400 would be more likely, or have next to no salary with large performance bonuses, if they need bigger cuts.
Tom W @ Apr 30th 2006 8:13PM
Yo RayRay,
#3 is an observation about the picture. Your "higher education" should have told you to study all available information before coming to a conclusion. Your parents would be disapointed.
iQuack @ Apr 30th 2006 8:29PM
Executive pay means nothing. As a stockholder of a number of companies I don't care what the execs make so long as the company performs well and its stock rises (and/or dividends rise while I wait for the stock to perform).
Any diddling with executive pay is symbolic and has no significant effect on earnings anyway. If management is lousy, it should be replaced with more capable people--this should have been done at GM a long time ago.
Maybe the prevailing suits pictured will turn GM around, but if they don't do it soon, they should be given the boot.
Too bad Ross Perot didn't take control when he was the major GM shareholder before he was bought off. GM would almost surely be stronger if Perot had been able to tear ass in that slothful company years ago. GM's downfall has been going on for decades.
Adrian @ Apr 30th 2006 8:35PM
If it takes 10 million a year, and 3 guys, at the top, to successfully keep a company in the red, every year, I could probably do it for 300,000 a year, and they can get rid of the 3 guys in the photo, and I'll even drive my own car to work.
Bleh @ Apr 30th 2006 8:37PM
The CEO received $2.2 MM in base salary. He (and the rest of top management) didn't get any bonus. The other $2.8 MM is the expected value of 400,000 stock options that he was granted. Those options however are worthless unless the stock price exceeds $36.37.
Additionally, Wagoner and other top managers received performance units that only pay out if GM's TSR (total shareholder return) is higher than the 25th percentile of the S&P 500.
In the world of executive compensation, the ONLY things that matter to executives are their annual bonus (Wagoner, et al. got none) and long-term incentives (Wagoner, et al. got performance-based vehicles). Base salary is not relevant and $2.2 MM is not high relative to other executives of Fortune 50 companies.
So to sum it all up, GM is doing everything right with it's executive compensation, but they probably should be finding new executives (which will cost them many $MM's more).
Schira @ Apr 30th 2006 8:52PM
I am just curious .. How much each customer will be paying towards their salary when they buy a car ...
Salary of the top shots / number of cars sold? Any approximate figures?
Tom Design @ Apr 30th 2006 9:16PM
I always said, $400,000 with a take home of $25,000/mo should be enough. You could get a mortgage on a Detroit mansion (a Clifford Wright Designed Architectural Beauty 6,000sqft, 5 BR, 5 Bath, 2 half Bath on an acre for a 14,950/mo mortgage is currently listed). No car expenses of course. Two kids in Ivy League (#1 needs $44,287/year for Notre Dame so a loan for half at $22,144 and cash payment on the rest at 1845/month and #2 Stanford University $48,000 :: $24,000 loan and $2k/mo cash). Then property taxes, charities, The Club, clothes, dining out, property upkeep, insurance, food, electric, heat, 2 vacations/year (Puerto Plata Luxury Oceanside Villa with Panoramic Views, Pool and Staff 5BR+/7BA Sleeps 16) $1410-$3475/wk US Dollars and, Cannes France (9 nights in the Hotel Juana Deluxe Executive suite for $2900).
You might need a budget, and to live on some credit cards, but hey, welcome to the "working class" and the life of Americans.
John Smith @ Apr 30th 2006 9:24PM
The only sensible post on this board:
Don't be a "lemming" corporate basher.
8. Executive pay means nothing. As a stockholder of a number of companies I don't care what the execs make so long as the company performs well and its stock rises (and/or dividends rise while I wait for the stock to perform).
Any diddling with executive pay is symbolic and has no significant effect on earnings anyway. If management is lousy, it should be replaced with more capable people--this should have been done at GM a long time ago.
Maybe the prevailing suits pictured will turn GM around, but if they don't do it soon, they should be given the boot.
Too bad Ross Perot didn't take control when he was the major GM shareholder before he was bought off. GM would almost surely be stronger if Perot had been able to tear ass in that slothful company years ago. GM's downfall has been going on for decades.
Rastus @ Apr 30th 2006 9:35PM
I never knew White Trash could clean up so well. Why, ole Lutz looks like he has a fifth of Bourbon in his breast pocket...all the while Wagoner is thinking to himself "The dirty sombitch won't even share with me".
Talis @ Apr 30th 2006 9:51PM
#10; Bleh:
You are right, you know. It is a shame so many people do not understand the corporate pay structure. In fact this report is just stating what most of us already knew; that GM's top three guys are working their asses off and not getting paid for it--mean while, all of the UAW guys in GM job banks, get paid to sit around watch TV and talk to each other.
Just remember everyone, in the world of top corporate businesses a few million dollars is chump change. GM is spending Rick's year end bonus on updating the UAW controlled factories... Yes, the updates would have happened anyway, but the fact that GM can save a few million every year for the next say 5 years is awesome news.
lets do some simple math--to all of you accountants out there this is a BASIC example--If GM can save let's say 5 million a year over the next 5 years, that's 25 million dollars! Now that 25 million dollars will not be put in a GM savings account, (this part of my example is what the "Big (bad?) Oil" companies are going to do in the next few years) GM will take that 25 million and reinvest it into their products.
New tech development, better-more automated-factories, better materials (no more hard plastics), better engines (no more leaky intake gaskets/ more powerful small block Chevy’s?) New platforms (can we say Camaro anyone)
I would not be so quick to second guess the bigwigs in GM; they know what they are doing. I know Lutz has come under fire lately for the GTO and a few other mishaps in the lineup, but all in all he is going a lot more than anyone in GM has done in a long time. A quick run down of cars that never would have made it with out good ol' Bob:
-The Kappa cars (Solstice/sky/(Opel)GT/(Saab)aero-x production model)
-The V-series caddies
-the XLR
-the GTO's rebirth
-the Cobalt
-the HHR
-the SSR
-almost all of the new SS Chevy’s (Impala, Monte Carlo withstanding)
-the awesome new line up for Saturn (can we say Opel by any other name)
-If there's anything else I missed I am sorry...
JGN @ Apr 30th 2006 10:04PM
It sounds like GM is starting to listen to its customers. I hope this translates into higher quality vehicles that I can get behind.
Mal Fuller @ Apr 30th 2006 11:24PM
#5, Ray, Ray,
When your educated ass wrote "The worst of it, is that they are destroying peoples lives...." you illustrate that it's not Ray Ray at all, but Dumb, Dumb instead! That's because you didn't have the education necessary to realize that it should have been people's not peoples!
Mal Fuller @ Apr 30th 2006 11:29PM
#5, Ray, Ray,
When your educated ass wrote "The worst of it, is that they are destroying peoples lives...." you illustrate that it's not Ray Ray at all, but Dumb, Dumb instead! That's because you didn't have the education necessary to realize that it should have been people's not peoples! Oh, and how 'bout the comma that doesn't belong between it and is. Perhaps you should take a course in remedial punctuation before you cast any more stones.
Mal Fuller @ Apr 30th 2006 11:37PM
#5, Dumb Dumb,
I just noticed that when you wrote "First #3 doesnt make any sense- is it one of those under-educated GM consumers." You didn't realize that a question mark, not a period belonged at the end of your sentence.
Scott Eaton @ May 1st 2006 2:35AM
#15: "It is a shame so many people do not understand the corporate pay structure. In fact this report is just stating what most of us already knew; that GM's top three guys are working their asses off and not getting paid for it"
Last I looked, on this planet $5.5 million is more than "not getting paid for it."