Detroit CEOs to Get $1 Per Year? Not Quite
The heads of Detroit’s automakers might be willing to accept $1 salaries as a condition of a federal bailout, but they won’t commit to capping their total compensation, even at $1 million.
So says Rep. Brad Sherman (D-Calif.), a liberal member of the House Financial Services Committee, which hosted the three auto execs this morning to examine their requests for $34 billion in emergency loans.
There’s been much made of the $1 annual salaries that the CEOs say they’ll accept as a term for receiving that bailout. But let’s not confuse “salary” with “compensation.” Relative to bonuses and stock options, the salaries of corporate executives often constitute the smallest chunk of the pay package.
Indeed, last month Sherman asked each CEO if they’d be willing to limit total executive compensation to $1 million a year in exchange for the bailout cash.
All say they’ll forgo 2009 bonuses, but refused the $1 million cap. And there’s good reason why.
Ford CEO Alan Mulally, for example, received $22.8 million in 2007, according to Equilar, an executive pay database, via The L.A. Times. But less than half of that — just $9 million — came in the form of “salary and cash incentives.” The rest came from stock options.
For Rick Wagoner, the head of General Motors who received $15.7 million last year, $11.7 came in the form of “stock-based compensation,” the Times notes.
Chrysler, a privately held company, hasn’t released its executive compensation figures.
The stock of all three companies has been in the tank for some time, of course, but that could change for the benefit of the executives if the Big Three were to get some good news — for example, if they could secure $34 billion in taxpayer-funded loans from Congress.
In addition to the compensation question, Sherman also asked the executives: (1) if they would commit to closing foreign plants before domestic ones, and (2) if they’d be willing to set aside funds to honor warranties in the event their companies fail.
The California congressman wasn’t pleased with the responses. From his statement:
My three questions were designed to secure commitments protecting consumers and American workers from the risks associated with the financial difficulties of the Big Three automakers. Unfortunately, GM, Ford, and Chrysler were unwilling to make these commitments.
Who said it was just Republicans criticizing the bailout?