Chicago 2009: Hyundai CEO Krafcik calls on auto industry to set example with reform
by Sam Abuelsamid on Feb 12th 2009 at 10:59AM 
Hyundai America CEO John Krafcik delivered a keynote address at the opening of the Chicago Auto Show media preview where he called on the industry to dramatically change the way it does business. According to Krafcik, for decades, extravagance has been the name of the game in the car biz – just as it has been in most of corporate America. In the past six months, however, things have started to change, with automakers cutting back on the overblown productions at auto show press conferences and in many cases eliminated such conferences altogether. But Krafcik doesn't think the swing has gone far enough.That's just one small part of the problem, though. Krafcik acknowledged that the industry as a whole is seen as slow and unresponsive as well as wasteful. He called on voluntary limits to executive compensation that are tied to some multiple of what the average worker gets paid. "What if our industry was the first to exercise a more inclusive form of capitalism that voluntarily restrained executive compensation to a reasonable multiple of average employee salary? And what if our industry adopted a uniform code of conduct regarding gifts, meals and business entertainment?"
Krakcik wants his industry to be more modest and humble. Instead of fighting everything that needs to be done, he believes the auto industry must take the lead in re-shaping corporate America.
[Source: Automotive News - sub. req'd]
Reader Comments (Page 1 of 2)
dukeisduke 11:09AM (2/12/2009)
Hyundai's US operation goes through a different CEO about once every 12 months (after they miss Seoul's insanely unrealistic sales targets, they're out the door). So we're supposed to listen Hyundai?
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homunculus 11:15AM (2/12/2009)
i think companies surviving on government handouts could learn a thing or two from those that are doing well.
Polly Prissy Pants 12:42PM (2/12/2009)
Yea, this will definitely not make him very popular around the executive vomitorium.
hyundaifans.com 11:56PM (2/12/2009)
I am unsure if this guy has any cred. I mean he is like the 5th guy in 6 years to run Hyundai USA. Not a good look for the company...
BoxerFanatic 11:11AM (2/12/2009)
See, now this I have a LOT of respect for.
A business man who wants to figure out better ways of doing business, and in favor of SELF regulation and SELF governance, and cooperation.
No mention of government, and that alone is a point that gains respect from me.
THIS is capitalism, and it works every time it is tried, if the government can be kept at bay, and allow people and businesses to do what is best, both for themselves, and their customers.
This grows business, revenues, and even tax revenues from that growth. It may not show in down market periods that enforce market efficiency, but it goes very well when the market stabilizes. It does not, however, feed political power, and that is a good thing.
Kudos to Hyundai. They are hungry to compete by making good product, and they are smart enough to realize that they are the ones to make it happen, not someone else, or taxpayer dollars.
If I saw this kind of self evaluation, and product push from other companies like GM, we would see much less need for bail outs, and support would rally for hopeful outlooks.
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why not the LS2LS7? 11:37AM (2/12/2009)
Yes, capitalism works every time it is tried. When Enron decides to buy up all the electricity in California and then waste it by putting it down power lines that don't have enough capacity to carry it, thus making the electricity they didn't waste more valuable, it sure as heck showed us that capitalism works every time FOR THE COMPANIES.
Or maybe when companies conspired to fix the price of concrete in the Indiana (actual jail time was served).
http://www.usdoj.gov/atr/public/press_releases/2005/209816.htm
Companies will always do what is best for them, including putting out PR statements that don't mean anything. I'm more concerned about the consumer.
BoxerFanatic 12:30PM (2/12/2009)
@LS7...
Are you kidding me? Doing what is best for the company SHOULD be the same thing as doing the right thing, not the wrong thing.
Enron ended badly. IT WASN'T good for them. It may have seemed good before the end, but it wasn't good.
Companies that commit fraud, price fixing, etc... should be prosecuted under the law. That does not mean they should be co-opted by government oversight in their operations, or bailed out.
That would kind of mean that doing BAD things have consequences, and by definition, are not the best thing for the company, or their clients or consumers.
A good company that does well, is one that operates morally and ethically, and makes a profit at it. Take any of those three things away, and you have something else, and not good capitalism.
why not the LS2LS7? 12:54PM (2/12/2009)
I agree, when companies do this stuff, it isn't good capitalism. And companies, if left to their own devices, will not engage in good capitalism, because under capitalism, marginal profit drops to zero.
But you say leaving things alone works every time. It doesn't. There is no magic to not regulating companies. You can still have bubbles where companies work in their own interests, but it still blows up because their business model didn't work. You can have collusion, where companies work in their own interests to the detriment of the consumer. You can can have Maiden Mills where the company acts very morally and still gets crushed (to the detriment of the company owners and workers) by capitalism.
As much as we would like to think that markets lead directly to wealth and the improvement of the condition for all of us (the theory of capitalism), it frequently doesn't. Constant supervision is necessary.
And empty statements like this guy makes (seriously, every company already has a policy on gifts, meals and business entertainment) don't really change anything.
MJL 11:13AM (2/12/2009)
He looks like the public defender in "My Cousin Vinny"
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Bryan 11:17AM (2/12/2009)
Why doesn't this guy start the ball rolling... im sure congress would bust the big 3's balls so hard that they are forced to follow
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homunculus 11:14AM (2/12/2009)
he's a witch! burn him!
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why not the LS2LS7? 11:17AM (2/12/2009)
I'm not sure he even said anything there.
I think what he said is "look at me, in my headshot, I'm wearing a casual polo shirt!"
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JB 11:20AM (2/12/2009)
'a more inclusive form of capitalism that voluntarily restrained executive compensation'
He's drunk!!!! and hopefully not driving.
I'll tell you what, Johnny, you restrain yourself and hand over to our new overlord government or whoever wants more of your paycheque, but I refuse. I need more these days, not less!!
Our Republic is being toppled and a neo-marxist, new left thinking regime been handed power.
We fell asleep at the wheel. Good Night, America. The nightmare is real and we're not going to wake-up from this one
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Stephen 11:29AM (2/12/2009)
The sky is falling! The sky is falling!
Don't you think you're going a little over-the-top there?
JZeke 11:41AM (2/12/2009)
Dude, you're nuts. Seriously.
BoxerFanatic 12:35PM (2/12/2009)
@JB,
He is talking about restraining pay to a multiplier policy because it is good for the company.
HE SAID NOTHING ABOUT THE GOVERNMENT. THANKFULLY.
He didn't say anything about giving more money to anyone else, he was talking about managing corporate costs and responsibility WITHIN the corporation.
He merely asked his colleagues in the automotive market to join him in such responsiblity, WITHOUT government involvement. Government involvement would limit them to $500k salaries, with no reasoning, no market force involvement, just bureaucratic crap. He is trying to stay away from that by running his business well.
That is responsible, prudent, and admirable.
why not the LS2LS7? 1:02PM (2/12/2009)
All he did was talk.
Things are different for small and large companies. Due to the fact that people expect to make more money than the people working for them, execs of large companies always make more than those of small companies.
So it's easy for the CEO of Hyundai America (a rather small company) to make talk about how their CEO salaries are lower. He knows his competitors can't match him. When the Chaebol (like Hyundai Korea) are ready to do what this guy says, then we'll know things really have changed.
the vegas style guy 1:10PM (2/12/2009)
Oh brother. In two weeks you're saying Obama has turned the country Marxist? Uh, dude, Bush is the one who brought socialismo to the boardroom.
Simple fact: Corporations RARELY do the right thing. Simple.
Government oversight is why we no longer have babies born heavily deformed from chemicals that companies knew were harmful. It's why you can actually breathe in a night club in California (the casinos here in Vegas make sure visiting them is a hellacious experience for non-smokers who are the majority). More government oversight during the last eight years would have prevented the current hellhole we're in (and I don't excuse Frank and Pelosi who slept at the wheel for the last two years). A lack of government oversight is why we don't have any idea what the ef Wall street is doing with our "bailout" money (and that money truly was a bailout unlike the auto industry's "loans").
So, don't get on your reactionary "Limbaughian" faux rage soapbox. Stop spouting the party line and become an actual thinking American. If you did you would see that what you are saying has no basis in the reality of the economic world as we know it actually exists in practice, not in your am radio induced alternative universe.
Galley 11:30AM (2/12/2009)
I live pretty well on $40K per year. I like to see these CEOs do the same.
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alfaBAT9 11:36AM (2/12/2009)
+1.
"..modest and humble.."