written by bendygirl at Thursday, November 20, 2008
I've been watching the hearings, hearing the testimony and pulling for the bridge loan. Then there was this tidbit, reported by Dana Milbank in the Washington Post:
So it was hard to feel sorry for the executives when Rep. Peter Roskam (R-Ill.), late in the hearing, reminded them again that "the symbolism of the private jet is difficult," and mischievously asked the witnesses whether, in another symbolic gesture, they would be willing to work for $1 a year, as Nardelli has offered to do.
"I don't have a position on that today," demurred Wagoner (2007 total compensation: $15.7 million).
"I understand the intent, but I think where we are is okay," said Mulally ($21.7 million).
"I'm asking about you," Roskam pressed.
"I think I'm okay where I am," Mulally said.
And don't even think about asking him to fly commercial.
CEO pay is a hot issue. AIG is goind out of its way to pay out for their "top managers" and then you have the big 3. The emphasis has been on the income of workers represented by the UAW (think Mitchells smarmy comments from Sunday's Meet the Press) and then there's reality:
More contract info by company here: http://uaw.org/contracts/index.php
Chief Executive Officer
Ford Motor Company
$22,750,385 in total 2007 compensation
G. Richard Wagoner
Chief Executive Officer
General Motors Corporation
$19,761,874 in total 2007 compensation.
Assuming a 40 hour work week, that's $9,615 an hour for Wagoner - 150% of the average CEO salary of $6,153/hour.
Chrysler isn't traded, but here's this article from the weekend about how Chrysler is paying about $30 million in retention bonuses to keep top executives while cutting thousands of jobs.
How much does the average AIG worker make? What's the median? How about the other "bailed out" organizations? Ones where they sent their IT operations off shore to India and elsewhere and canned all of their IT people like IndyMac (they weren't bailed out, just belly up)?
It's fine to get these numbers, but the issue isn't how much the average autoworker makes or the average Toyota or Honda worker, the message should be that these are American Workers who WORK. They produce American jobs, they contribute to their communities, they raise their kids, they vote and yeah, their represented by a union but they don't deserve anything less than what Wall Street has already gotten. That includes the Executives because not to do it means a destruction of local economies, not just detroit, we're talking Parma Ohio, Lordstown, St. Louis and this doesn't include the rolling effect on suppliers.
But let's take another look at AIG, again, from the Washington Post:
American International Group plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant.
News of the payments to top AIG talent comes as the federal government has just put more money into saving the company from bankruptcy, beefing up the total public commitment to $152 billion. Meanwhile, members of Congress are questioning the company's expenditures -- including lavish business trips to resorts -- during a time when taxpayers are on the hook for the bailout.
Companies over the past 20 years have increasingly use deferred compensation as a way to attract and retain highly paid executives. Under these plans, top talent can postpone taking some of their large annual salaries for years -- often until a set date -- and can put off being taxed on it. Some wait to take the funds until they retire, when they would presumably be in a lower tax bracket.
Few executives seem to understand the correlation we common Americans make with failure and excess. I for one see their salaries and wonder, WTF?
But after watching what's been going on with AIG (and the scandalous behavior AFTER their bailout-not a loan), it's just incredible that these executives from the big three flew to DC on private corporate jets. But for Mullaly and Wagoner to say no to taking a massive ONE YEAR pay cut as Nardelli has said he'd do, well, damn, I wouldn't have given them a bridge loan either, because they aren't a good risk. Of course, that's me speaking as a former home loan underwriter. If I had a homebuyer with this kind of credit, this kind of debt load while arriving in a vehicle well beyond what should be their means, I'd have to really think long and hard about those combined factors and here and now, it'd be one tough call.
What's saddest of all, it seems only Nardelli really gets what's at stake in this financial melt down, survival.