• Jun 16, 2009
With General Motors in bankruptcy, it was only a matter of time before pensions came under scrutiny. The Detroit News is reporting that GM CEO Fritz Henderson has confirmed that executive pensions beyond $100,000 per year will be cut by two-thirds. Recently defenestrated boss Rick Wagoner will likely take the biggest hit of all – he was supposed to receive $22 million over five years as part of his retirement package, but that number will reportedly drop by up to $15 million.

The move by GM mirrors closely that of Chrysler, which also took an axe to its executive retirement pay structure. Ex-CEO and one-time company savior Lee Iacocca lost his company car and may lose some or all of his monthly stipend, and he is now representing 1,200 ex-Pentastar employees protesting the move. Chrysler retirees have been lumped together with the Pentastar's other creditors, and it will be up to a judge to determine what amount they will receive in the months and years ahead.

[Source: Detroit News | Image: Bill Pugliano/Getty]


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  • 38 Comments
      • 5 Years Ago
      About Time, you shouldnt expect anything if the company is broke.
      • 5 Years Ago
      Precisely as it should be.
      • 5 Years Ago
      This is what pains me.

      GM is in Chapter 11. All contracts are null and void.

      Rick Wagoner and the likes of his do not need pension. They are self-sufficient.

      If I were Fritz Henderson, I would channel that money to pension for folks who are at the bottom of strata. I would simply remove all the pension in excess of $100K.
        • 5 Years Ago
        @Santosh, and basically @ everyone else crying for blood...

        A move I'm sure you'd be the first to raise your hand in support of if you were a GM employee making $100k, right? I bet a lot of people in the world live on much less than you do... maybe you should give up some of your hard-earned money. After all, you don't NEED it.

        The problem with this equation is that management is being made a sacrificial lamb. Do you think Rick Wagoner's pension is a major drag on GM's finances? They spent more money than that researching the most consumer-friendly color for the "On Star" button. The real drag is the UAW, and they haven't given up anything of substance.

        As an employer of members of the SEIU, I can tell you that the absolute 100% truth of organized labor is that it is a massive negative influence on productivity, creativity, and accountability everywhere it's found. Unions are an anachronistic cancer on this country's industry that exist for one reason only - they sure do make an easily targeted voter base.

        One of our HR executives actually worked as a corporate liason to the UAW from Ford for more than 10 years. He should write a book of the things he saw and experienced in that role - it would make you laugh until your face hurt if it weren't so deadly serious.
      Jvijil
      • 5 Years Ago
      oh how hard it is to live off $15 million...
        • 5 Years Ago
        @Jvijil
        I agree. He'll probably starve.
      • 5 Years Ago
      This is an outrage! First the guy gets forced out of his job by the president of the United States (which is shameful enough in itself) and then the government cuts his pension by 68%. This is what happens when you let the government get involved with the private sector. All while the union is kicking back with a bigger share of the company than the bondholders, who by law should have been repaid first. Soon enough the government will buy the stake back from the union so that they can "pay for the workers healthcare" but really the government is just buying votes through illegal thug tactics. Get ready for healthcare.
        • 5 Years Ago
        AZZO,

        Again with the anger...and the caps and apperent stuck 'shift' key.

        "The beauty of the freakin' net, eh? Sit anonymously in your den & type complete bull$h*t that you wouldn't dare speak in public (unless you enjoyed a good a$$ whoopin'...)!!! PLEASE!!!"

        I don't disagree with what you're saying but jeez. If it's that troubling don't get online. You are the one talking about "a$$ whoopin's" to someone you don't know. You're hiding on the net just like he is and everyone else on here. Besides, you have no idea who hacob04 is. That could be Chuck Liddells screename!
        • 5 Years Ago
        @hscob04: That is the Supreme Court's job. If they say it was legal, it was legal and there's no amount of bitching that you can do about Obama or big government to say otherwise. It's just your opinion going up against a legal fact.
        • 5 Years Ago
        Uhh, if GM went belly-up (Ch 7 liquidation), which would have happened w/o govt. intervention, Wagoner would be getting NOTHING, except for what the Pension Benefit Guaranty Corporation would cover.

        Really, where do you people come up w/ these crazy, misleading allegations?

        And oh, healthcare reform has long been overdue.

        • 5 Years Ago
        hacob04, what was done with Chrysler and now with GM with the order of repayment was not illegal. The U.S. Supreme Court refused to hear the case brought by the Indiana creditors against Chrysler, effectively supporting the move. If they didn't think it was illegal, then it wasn't. And the Supreme Court is heavily biased with Republican-appointees, so partisanship does not seem to be the issue.
        • 5 Years Ago
        Hey hacob04: WTF are you neighbors with... Rush Limbaugh??? The the President was such a douch for setting conditions for how the AMERICAN tax $$$ was to be spent! He didn't FIRE anybody... he simply told Wagner to WALK or GM got NOTHING!!! Fritz Henderson agreed to the "loan" conditions & became CEO.

        Rick Wagner was OVERPAID for below average work for YEARS. The man also earned (& saying EARNED is a freakin' stretch...) 12-18 MILLION dollars a year (w/o his other benefits...) Save for compassion for people who DESERVE it (the designers, engineers, & other workers who are unemployed & looking at losing homes, NOT sending kids to college, etc.

        The beauty of the freakin' net, eh? Sit anonymously in your den & type complete bull$h*t that you wouldn't dare speak in public (unless you enjoyed a good a$$ whoopin'...)!!! PLEASE!!!
        • 5 Years Ago
        Agreed. And about healthcare reform, most of the people that have heath insurance have a small amount taken out of their paychecks to pay for it. With a government-run health insurance, that just becomes another payroll tax. It wouldn't affect your take-home pay. The benefit is that more of your money would be going to medical treatment instead of paying out the huge salaries and bonuses that health insurance execs get. And if Canada is any indication, prescription prices should also drop. There really isn't a downside here.
        • 5 Years Ago
        It was nothing more then a political move to put votes in the democrats pockets. Everyone knows they depend heavily on union votes. If you ask me the way Obama and his people played this out was brilliant. First they tell the companies not to go into chap 11 because they knew what intentions GM and Chrysler were going to seek which was try to eliminate the UAW. It is not that GM doesnt sell cars people want they are always the top sellers world wide in car sales its the burden of the UAW. The Administration gave them X amount of billions then like a mafia tactic tell them hey we will forgive the debt but now we are taking part of the company and as such are going to be making the decisions around here. Whats the first thing the administration does? secure the UAW and even gave them stake in the company and position the boards. What they do with the actual bond holders and everyone else that poured money into the company? send them waking home with pennies to the dollar while they look after the employees and secure their future...The Obama people stepped in to secure their base which are the Unions and the people that actually invested in the companies which represent "republicans" gave them the boot....
      • 5 Years Ago
      I do agree with severely cutting pensions. It makes sense.

      There, I said it calmly.
        • 5 Years Ago
        I don't think people will take you serious without calling someone an "idiot" or wanting to challenge them to a fight or without at least 10-15 '!' or a bunch of caps. :)
      gerrymaryl
      • 8 Months Ago
      I would appreciate any comments you may have on the Budd Co. recent bankruptcy filing to address retiree pension and health benefits re it's impact on hourly vs. E & A .
      • 5 Years Ago
      Not entirely unexpected either, but still must have been somewhat of a shock to Wagoner.
      • 5 Years Ago
      I hope Lee Iacocca now drives a ford. He literally saved that company and they repay him by taking his chrysler away. I mean sure he can afford anything he wants probably, but its the principle of it. They owe that to him. And Wagoner can go crawl under a rock somewhere for all I care. Wagoner needs to get pinched a lot harder than he is getting now, like to the tune of maybe a couple hundred thou instead of countless millions for running GM into the dirt. Whew... I feel better now.
        • 5 Years Ago
        Lee does drive a Ford on occasion. He has one of the first Ford Mustang convertibles. Chrysler should hire Lee back. He is the one person who might be able to get America to give the "New Chrysler" a chance.
        • 5 Years Ago
        Jason: Mr. Iaccoca just joined the National Chrysler Retiree Organization to assist his ex employees!!!

        http://www.ncro.org

        I think he can afford to give his Chrysler lease cars back (or buy new ones...) He's not driving Fords (unless he wants to...) GM retirees won't be calling Rick Wagner (& could give a $h*t what he drives...)


        • 5 Years Ago
        Mark... The new face of Chrysler is a much younger Italian guy!!! He will intro Fiat & Alfa Romeo's to Americans. Will also trim GARBAGE like Jeep Compass & the Avenger / Sebring twins.

        Let Lee assist the retirees & enjoy his vintage Mustang (that Ford or Chrysler didn't pay for...) JMO
      • 5 Years Ago
      I pinch
        • 5 Years Ago
        I meant, 'shouldnt', It's ridiculous. 7mm to Wagoner is outrageous. If the lower levels folks are loosing out, so should he.

        BA is asking people to work for free. Again, another example of exec outrageousness (and FYI I am on an exec trajectory where I work/have exec aspirations in case a few folks say I'm being bitter).
        Check this out, an exec making over $90K a month is sacrificing his ONE month of salary, and think he's leading by example for the baggage handlers and folks who are scouring a living. What kind of illusion is that:

        "British Airways is asking thousands of staff to work for nothing, for up to one month, to help the airline survive.

        The appeal, sent by e-mail to more than 30,000 workers in the UK, asks them to volunteer for between one week and one month's unpaid leave, or unpaid work.

        BA's chief executive Willie Walsh has already agreed to work unpaid in July, forgoing his month's salary of £61,000.
        "

        http://news.bbc.co.uk/2/low/business/8102862.stm
        • 5 Years Ago
        Pensions?? I didnt even know firms offered pensions these days. I work at a large tech company, we're making money and have salaries frozen. Never heard of anything like a pension.

        Seriously though, sorry, there is no contract. The firm is bankrupt. Therefore, all contracts are null and void. Sure, you worked hard and will loose money (and a ton of other people are), but there is no money to hand out and the Govrn certainly should support pensions, especially since there's always social security/retirement payoffs in the US.

      • 5 Years Ago
      Not that I think ANY of these people actually deserve the huge money they have been promised but...a contract is a contract.
      What I find bad about this kind of thing is that in the future, companies will be even MORE likely to go ahead and make these kind of huge promises on contracts, since they now know that even though it's in writing, it can still be changed in the future. Kind of sets a dangerous precedent, no?
        • 5 Years Ago
        that "precedent" went out the window with Enron.


        and yea every common man loves to dogpile an elitist.

        Pinch!
        • 5 Years Ago
        katshot -

        Corporations renege on contractual obligations all the time when they go into Ch11 reorganization.

        Heck, many corporations "renegotiate" financing terms w/ their lenders or other creditors outside of Ch11.




        • 5 Years Ago
        Katshot / Redeemed: Only companies who ran to their fairy god-parents (US Congress) are affected. I could live with that. Gov't not imposing these heinous conditions on Apple or Boeing are they?

        Actually, I was supportive of the government bailing MOST of these companies out, and not so much for the companies sake. Was really ticked off about the original TARP handouts, because the terms had no teeth.

        The government should, in our nation's interest, help MOST of these companies through tough times. However, the government should not throw a Fiesta, hang piniatas loaded with tax payers' cash and give whacking sticks to these jerks.
        • 5 Years Ago
        GM is BANKRUPT ... what contract???

        Ask the numerous suppliers & advertising agencies if they got paid yet? Chrysler is in the same boat.

        Ask Richard Petty Motorsports how many Dodge checks they've received since Chrysler bankruptcy... they had a CONTRACT as well.
        • 5 Years Ago
        I have to agree. From this point forward, to reduce payouts of future retiree's is certainly justified. But to go back and change it retroactivity is wrong.

        I can understand the angry comments against executive's getting this money but the problem is it sets a bad precedent for all other retiree's throughout the economic scale. Once you start swinging the ax, it's easy to keep going.
      • 5 Years Ago
      The guy was CEO of GM, people. What are you Chief Executive Officer of, your neighborhood paper route?

      It's all about relativity. Now you can debate the guy's merits all day long, but if you sign a contract and somebody says "welcome aboard, here's what you'll be making," you plan your life around that income level.

      At my income, I buy a Saab and a condo and live paycheck to paycheck, just like the guy below me buys an Accord and rents, just like the guy above me buys a Lexus and has an acre in the suburbs. Point is, yanking the rug out from anyone financially is a rotten thing to do - especially when it's being done to make a political point. California is bankrupt. Who's demanding that The Governator's benefits be whacked, or Nancy Pelosi's?

      Hate on Wagoner all you want, but you tell me one GM product that was truly world-class before he was appointed CEO in 2003. Quality costs money. Toyota has been doing Lean for decades. GM had no process until Wagoner was in the driver's seat. The only reason GM will ever be viable again is because of the groundwork that he laid down to ensure that the products they make are something you'll actually buy. If GM had gone down ten years ago, it would have stayed down because there wouldn't be anything to salvage, but now, in spite of their financial straits, GM can come back to life and make money hand over fist because you will WANT the new LaCrosse, you will WANT the new Camaro and you STILL want the Silverado.

      Give him a break. You would've done much worse.
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