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GM shareholders upset over Wagoner's pay
Considering the sorry state of financial affairs that GM appears to be in, it seems extremely unsurprising that the board would like to see some big changes made at the very top of the company. What is a little shocking, though, is just how soundly the specific proposals were rejected. For instance, a proposal sponsored by John Chevedden of Redondo Beach, California, which would have given shareholders an annual advisory vote on executive compensation and pay, found less than 38-percent of voters in support. Another proposal which was soundly defeated would have tied executive stock options and awards with company performance.Still, there were some vocal company detractors present at the annual shareholders meeting, such as Mary Ann Wiley from Seattle, Washington. She told GM CEO Rick Wagoner, "If the company does not do well, management should take an equal hit, and I don't think they've taken an equal hit." Wagoner's $15.7 million dollars worth of compensation for 2007 is as drop in the bucket compared to GM's reported loss for the same calendar year, so it seems obvious that there is a bit more to the problem than overpaid executives. Still, a little shake-up seems like a distinct possibility if things don't improve quickly.
[Source: Automotive News - sub. req'd]
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Reader Comments (Page 1 of 2)
sk13 7:39PM (6/05/2008)
They should have Paid him $15,700 and if he would not work for that then they can Outsource his Job! Of course $16 Million is too much.
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Snix 7:41PM (6/05/2008)
The pay for competency/talent argument wont work here.
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Johhny 7:42PM (6/05/2008)
Wowzers. Fukui the chariman of Honda for all of the world made only 370 million yen in 2007. Or 3.7 million bucks. 2 million base and 1.7 million bonus. In Japan they dont give stock options the board just writes you a check at the end of the year as a bonus.
hmmmm, maybe we should do that in the US. For the longest time CEOs just do whats good in the short term to boost the stock price which their compensation is tied to. Maybe they should do a bonus instead so the CEOs think longterm more
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Amber 7:52PM (6/05/2008)
Stock options is a relative new thing having started in the 1970s and used widely the last ten years.
Henry Ford used to give bonuses to his employees and managers usually around Christmas time.
Base plus bonus according to your accomplishments.
bakka 8:04PM (6/05/2008)
Great job. $15.7 mil to screw up a company! And you thought UAW members are overpaid!
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bakka 8:08PM (6/05/2008)
Just occurred to me, maybe i won't buy that new G8. Maybe these guys KNOW GM is finished and they are taking what they can.
I do not want to be stuck with a car that is out of production right after i buy it.
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psarhjinian 8:40PM (6/05/2008)
Did you know that Rick Wagoner, alone, makes more than the top nine executives at Toyota--from Kat Watanabe on down--combined.
It blew me away, too.
Further to "a tale of two leaders", under Watanabe (admittedly a longer term), Toyota has more than _doubled_ marketshare and nearly doubled market cap; GM under Wagoner has _lost_ a third of it's marketshare and wiped out 90% of GM's shareholder value.
Of course, there's all sorts of extenuating circumstances, but Wagoner and COO Fritz Henderson have presided over a far more destructive period than Zarella or Smith. And yet they make more, by far, than Watanabe.
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AirZurk 8:57PM (6/05/2008)
You could argue that most of the current problems are a product of previous management. If you think about it, it takes around four years to get a car from drawing board to production and far longer to reverse bad reputations (which were cemented in place by previous leaders). I'm not saying there doing a great job, but you have to acknowledge the fact that they were delt and AWFUL hand and changes in this industry happen slowly (espiecially reversing bad reps).
SteveRB 12:49AM (6/06/2008)
AirZurk :
Wagoner was president and chief operating officer in 1998. He was president and chief operating officer since 2000. He became chairman in 2003. So whatever bad cards GM was dealt, Wagoner had a hand in it.
Miguel 8:43PM (6/05/2008)
Of course it only garnered 38%. A shareholders meeting is voted per share, not per holder. So when the big shareholders (like, I dunno, the people on their board, i.e. Wagoner himself) don't like the sound of losing money, they vote against it with all the shares they control either directly or by proxy for those not in attendance. If you own, say, 11% of the company's stock and control, say 9% for foreign investors who aren't in attendance, you suddenly have 20% of the vote going your way. This is how big money screws the little guy.
Honestly, 15 million dollars is not going to make a dent in GM's money bleedout, but cash for performance need to happen. Wagoner did not earn his $15.7 million; it's that simple.
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JGN 8:57PM (6/05/2008)
People are always complaining about Union wages, even though they are comparable to non union wages paid by Toyota and Honda. But then, look at this guys wages, as compared to top people at Toyota and Honda. You'd think GM was beating the pants off of Toyota and Honda. GM and Ford are top heavy, it's just been too easy to squeeze cuts at the bottom, apparently it's too hard for them to swallow some cuts at the top. Share the pain Rick, or turn GM around.
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NT 9:04PM (6/05/2008)
Well don't forget that until recently the GM execs had taken rather large pay cuts.
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psarhjinian 10:23PM (6/05/2008)
The issue is performance-based compensation, or the lack thereof, in North America. While there's merit to the idea that you have to pay to attract talent, it's also true that there's no incentive to do well when the payout--even for failure--is huge.
It's all well and good for GM executives to be magnanimous about taking the occasional pay cut, but bonuses--any bonsues--shouldn't be awarded for what is essentially a failure of leadership.
I'm middle management at an SMB and I can assure you that, even though my organization is going to come out ahead (barely) this year, the management bonuses are flat out nonexistent except for the managers of certain sales divisions that have carried the company. This is up to and including most of the VPs and the President himself.
By comparison, GM has turned quarter over quarter losses and it's executives have been _rewarded_ for it. What part of that makes sense? Where's the incentive to lead and succeed given that, barring prosecution by the SEC or shareholder suits, there's no penalty for failure.
The counterpoint is that a company has to pay this kind of money to attract and keep talent. I have three issues with that:
* First, it's not working. That much should be obvious through casual observation of American corporate performance versus the result of the G8.
* Second, risk-averse, stay-the-course management like Rick Wagoner are there because the collude with the board, managing blame rather than strategic direction. Rick, himself, is a GM lifer, so the "attract and keep talent" doesn't really apply to someone who was essentially an heir apparent.
* Third, the value of leadership's role in a company is overrated. A corporation isn't some kind of gestalt being, with the CEO, BoD and senior managers forming the head and directing the organization like you direct you limbs. Trying to lead a company like that results in the rest of the "body" fighting you at every turn. Instead, it's more like river, whose leadership's best results come from nudging and directing with intent, but realizing that total control is impossible without massive, devastating effort.
Yes, Rick et al were handed a sad sack in General Motors, but they've had a decade to fix it and they've failed to fix it. Their strategy was flawed (obviously so, some might argue) and their inability to change the course of the company's direction is a direct reflection on said failed leadership.
And that, ladies and gentleman, is not bonus material.
Omer 10:36PM (6/05/2008)
for a middle manager at SMB you spent a lot of time on this website esp. since you write huge responses.
j/k.
psarhjinian 4:22PM (6/06/2008)
Omer,
p0wned!
The sad part is, I was at work when I posted that. There's only so much you can do when you're waiting for data to crunch..
havoc 9:24PM (6/05/2008)
due to the merger of GTE/BA (BA buy-out of GTE) our ceo chuck lee made off with some 100 million+ in total compensation between salary and stocks. About 2 months later our stock options bottomed out and the employees suffered of course then followed by the huge rounds of lay-offs.
At one point i had calclulated that something like 2 people a day (for 5 years) needed to be laid off to pay his compensation (not including his free phone service, company car, company jet, etc). execs are grossly overpaid imo.
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Omer 10:35PM (6/05/2008)
This is a not auto industry problem its just a labor problem in America. CEO are paid too much in general. Recently on a trip to Germany I heard that the government was upset because heads of major car makers were making "American Style" salary. I know its socialist view but the problem here is beyond that. Most CEO get paid a lot more they should and are shopped around like free agent athletes.
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jsjs 10:22PM (6/05/2008)
What's "socialistic" about CEOs and other top execs getting paid what they are ACTUALLY WORTH (instead of padding each other's paychecks by serving on each other's board)?
Few CEOs are ever worth tens of millions in annual compensation.
The people who DO deserve big financial rewards are the true innovators - people who start-up new companies, inventors, etc.
Stéphane Dumas 7:01AM (6/06/2008)
And it's not only in Corporate America but also in Europe as well
I spotted these infos from a French article then I saw at http://www.auto-moto.com/actualites/7839_Salaires-Le-patron-de-Porsche-est-le-mieux-paye/
the salary of the Porsche CEO Wendelin Wiedeking is between 60 and 70 millions of Euros and Ghosn of Renault-Nissan had in 2006 35 millions of Euros (they didn't had the 2007 stats), Alan Mullaly 14 millions of Euros, Dailmer (Dieter Zetsche) 10 millions of Euros and Segrio Marchionne of Fiat have 7 millions
MM 9:55PM (6/05/2008)
I believe GM Stock is undervalued. Remember, GM North America is doing poorly; GM Worldwide is doing well. Only 40% of GM vehicles sold last year were sold in North America. GM is Number 1 in China, Russia, Brazil, etc. Here is where GM is going to make its majority of its money because we are too concern with Unions and Safety regulations that make it next to impossible to build an affordable vehicle for the US Market.
If you think I'm wrong, you should see all of the vehicles that the Japanese, Korean, and American auto companies build that aren't available in the US. These are great looking vehicles, they just don't meet Federal Regulations.
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