Guest blog: Bob Lutz on being “way, way, way underpaid”
February 16th, 2010 • by Bill C
Last week, General Motors’ vice chairman Bob Lutz told the Detroit News that GM’s top executives are, as he put it, “way, way, way underpaid.”
“What you see is what you get, and it ain’t a lot,” said Lutz. “All I know is, right now, we are given our responsibility. And given the rigors of the job and demands and the accountability, I would say we are being paid
way, way, way below market.”
It’s true: Only a couple of GM executives make over a half-million dollars a year; a pittance in the modern culture of mega-pay for honchos and declining household incomes for the rest. One of these lucky persons will most likely be Ed Whitacre, who has anointed himself CEO after being elected chairman of the board.Whitacre, who collected a $158 million package when he retired from AT&T, is probably in line to make about $950,000, the same compensation given to former CEO Fritz Henderson.
It’s true GM does not enjoy the advantages afforded to Wall Street and the financial industry that got their TARP money with far fewer strings attached and simply conjured up some new money games to repay their loans and return to executive compensation levels that would make Mr. Scrooge green with envy. GM is pretty well limited to making and selling cars and trucks. But there you go; you play the hand you’re dealt. Especially if you begged for it.
Lutz went on to say he has concerns about retention. Really? Are these executives going to up and quit? In Detroit? In this job market? And there’s nobody in the entire state of Michigan who couldn’t step into their job and be happy to have it?
Let’s talk about some other people who are way, way, way underpaid.
Like thousands of GM white-collar employees who were forced out or sent off to early retirement only to see their pensions and benefits cut, cut and cut again. Or the folks at Delphi, once GM employees, who saw their benefits gutted in bankruptcy while hundreds of millions of dollars were requested for “retention” bonuses. Strange, but I haven’t seen them getting billions of dollars from the feds.
Knowing the auto industry, I would imagine most of these people had rigorous jobs, demands and accountability and look at what their efforts got them. But what these people didn’t do was steer what was once the largest automaker in the world into a situation where billions of dollars in federal money and more billions in forgiven or abandoned debt were required to keep the doors open.
That brings us to some other people who are underpaid: the thousands of people who invested in GM stock and planned on part of their income being dividends. Their investments are now essentially worthless. Yes, that’s one of the risks of investing, but it doesn’t change the outcome.
General Motors is on the hook for billions of dollars to the American taxpayer. To be blunt, anyone who has a job at GM owes it to the American taxpayer because without the government’s largess, assistance and bullying of various creditors, there would be few jobs at GM at all: just a small staff to handle the liquidation.
Since all this happened less than a year ago, I think it’s a bit disingenuous of Mr. Lutz to complain about the pay, especially for executives. Perhaps for once in the annals of modern American business, it would be best to let the incumbents earn their keep, turn GM around and pay off their debts. If they can pull that off, I don’t think anyone would begrudge them a raise.
But first, let’s see them earn it.
Well put. They gets their money when they earns it. I dunno, that’s how I always got paid. And I ain’t talking that kind of money either. Something approaching half a million/year? Right now I’d be thrilled with 10% of that.
What the financial sector gets away with don’t make it right. Maybe olde Bob oughta go eat some worms.
I always liked Lutz but maybe he should be unemployed and have to seriously worry about how he’s going to pay the rent/mortgage next month.
Personally, I wouldn’t begrudge Bob Lutz anything, including naming his own salary. Even yet, he is the consummate “car guy” and would have made Chrysler into a dynamic power house. No thanks to Iacocca. Then, again, I look around the potholed landscape and note, for the record that: “it is a new day in America.” Hmmm. Sorry, I am still attached to the way it was, when America was the greatest country in the world. I labored for 40 years or better in the service of that country in one way or another, and still feel justifiably damned proud to have been able to do so. Just because the government sez so, does NOT make it so. The people still hold sway in this country, although there are many that are working feverishly to derail the Republic, reframe the Constitution, and bury “the people” under swirling masses of irrelevant regulatory compost heaps of rotting garbage and sewage treatment effulents.
Yes, there are people who engage in class like warfare, encouraged by political entities to further their own means. I do not see how anyone can hold Bob Lutz singularly responsible for the mess that was already underway when he arrived at General Motors a few years back. There are others entirely more responsible for the mess than he. As well, the government DID NOT HAVE TO bail anyone out. The answer was to let them go bankrupt. What would have happened? The companies would have gone on building cars, albeit with reworked budgets, with leaner, meaner money, and under the watchful gazes of bankruptcy court judges, who, IMHO, are far more versed in budgetary oversight than the current crop of politicians taking weed in Washington D.C. these days.
And do not kid yourself, it is the government singularly responsible for the current down turn with the criminal activities of BARNEY FRANK and CHRISTOPHER DODD heading up FANNIE MAE and FREDDIE MAC, assuring administration after administration that both TAX PAYER funded organizations were “sound as a drum.” So that the toxic mortgage crisis spilled over into the entire economy. Anyone want to take a wild guess at what the REAL cost of cleaning up that mess is? Not billions, folks. Literally TRILLIONS, QUADRILLIONS of dollars. Those two guys ought to be buried under the corner of a very large jail. Yet, the true nature of it all has, and still is being swept under the rug. The previous administration, despite all those that want to blame it for everything that is wrong with this country and the entire world, did propose legislation to get control back in FMae and FMac, however, the democrats turned it back, filibustering the entire process. Wonder why? Partly, they never guessed that it would and of course, did fall out of control.
However, that does not relate to Bob Lutz. Bob could quit right now, and not take any salary or retirement from GM, and never have to worry anyway. He is rich in his own right, as is his wife of many years. Further, he has his Marine Corp pension from his pilot days of Marine fighter jets. However, that, compared to his investments, is rather peanuts in scope. Nevertheless, it also ain’t too bad, either. Free health care too. His comments, like many he has made, due to his conservative points of view are quickly taken out of context and turned inside out, used like barbs against him. Give him credit where credit is due. He keeps his cool even under the silliest of exercises of liberal slings being tossed his way.
Are you going to begrude ALAN MULHAY of FORD his huge salary? He didn’t take any cuts, and earned a nice bonus from what I understand. He also stated plainly that he had no intention of cutting his own salary. So why not go after him too? Of course, FORD stayed the course and didn’t take the bail out money shoved at them by the Federal Government. The FED was ALL TOO EAGER to enter the fray I think. They wanted to gain control of the auto industry, seeing it as another “evil enterprise”, a huge conglomerate of corporate excess, with bloated financial resources, and no regard for the little guy. Please. Despite the FED playing the bigt brother role, offering their help, that was not the real reason for the bail out. Gaining control was. However, it turned out that it was a little too much, and far too early for definiative gains in that regard. Now, banks, and the auto companies are paying the government back, which stands to earn HUGE obscene profits from the scheme. Are we going to pan the FED for taking too much money???
I have no problem with a proven “hero” like Lutz taking the money; on the other hand, the rest of them seem to feel they deserve it, too, and they don’t. Nor do most CEOs.
Some of the best CEOs make less than $600,000 a year, with all bonuses thrown in. Some of the worst make the highest salaries. If that’s class warfare, it goes both ways, because as the CEO salaries go up, the manufacturing people lose their jobs and pensions, get their salaries cut, and end up competing with slave labor.
Dear Mr. Redgap,
I quote You!
I live in Europe and i know exactly what means let the government decide for You:a huge public debt to repay with the money of the taxpayers. Let instead the market decide.
I’ve always thought US was something different from EU but unfortunately seems that distances are becoming really thin lately.Reading the weblog was interesting for me because i’ve learned that You have a wrong perception of what EU is (especially Mr. Hagen). This is not the paradise of social securities (welfare). If i need a visit from a specialist (doctor), if i want to use the public service i have to wait one month (maybe less but often more) and still have to pay a part of it(according to the level of my salary).The result?People who can afford to pay,pay and go the next day privately.Every thing works like this:if You have the money to pay You can have everything: big cars,big houses,use gasoline,have all the services when needed.The middle class here is disappearing,it is killed by taxes needed to pay the inefficiencies of the public system.
Dear Mr. Redgap,
I quote!
I live in Europe and i know exactly what means let the government decide for You:a huge public debt to repay with the money of the taxpayers. Let instead the market decide.
I’ve always thought US was something different from EU but unfortunately seems that distances are becoming really thin lately.Reading the weblog was interesting for me because i’ve learned that You have a wrong perception of what EU is (especially Mr. Hagen). This is not the paradise of social securities (welfare). If i need a visit from a specialist (doctor), if i want to use the public service i have to wait one month (maybe less but often more) and still have to pay a part of it(according to the level of my salary).The result?People who can afford to pay,pay and go the next day privately.Every thing works like this:if You have the money to pay You can have everything: big cars,big houses,use gasoline,have all the services when needed.The middle class here is disappearing,it is killed by taxes needed to pay the inefficiencies of the public system.
The thing that bothers me is the issue that it seems to matter what someone else makes as salary. What business is it that we, as Americans, suddenly want to take issue with what someone else brings home for their pay?
Yes, it does go both ways. Some of the highest paid CEOs also increased pay, added thousands of jobs, gave added benefits, (without even fighting a union) and established a sense of “belonging” which is probably as important as pay in a big organization. Further, there is no “slave” labor in this country. Even those jobs in fast food restaurants pay at least what the minimum wage is. Granted you aren’t going to get rich on it, nor is it as decent as it could be, but, there is no “slave” labor involved. You can walk out at will, anytime. No one will come to drag you back nor force you to work, for that matter.
I worked in a McDonald’s once a long time ago, when I could not find anything else. The first day, I stood in one spot for 4 straight hours making biscuits, and could not do anything else! Does that qualify for “slave” labor? We were short on personnel, and hey, someone had to make them. But, the very next week, I was also offered an assistant manager spot that paid 4 times the wage I started with. No, I didn’t stay, but could have made a life out of it, had I chosen to do so. There is no less any opportunities for anyone that Wants to work!
My eldest daughter did just that, starting as a counter person, and now, heads up a customer service portion (Professorship) of Hamburger University in Atlanta, whereby she owns interests in several local places. She has near 25 years with McDonalds and earned her Bachelor’s from Hamburger U. It is out there if you want it.
The biggest obstacle is the government, along with the repressive, regressive, puniative taxation system that we have. The harder you do work, the more money you do earn, the more that this government system takes from you, while distributing it to people who won’t or don’t work. I am not talking about people who lost jobs due to lack of employment, but those who just have never worked and made a life within the system. That gives new meaning to making a “slave” labor statement.
I happen to believe that what I earn is mine, making it thereby no one else’s business how much, nor any business of the government to be able to exercise it’s police powers to automatically confiscate a portion of it for things that I dispute and do not believe should be supported!
Well, the problem is that in today’s world, the people that worked for years are getting their retirements and health benefits taken away by corporations that are paying multi-million dollar bonuses to the top executives. Really makes one wonder if this is what happens to those who want to, and do, work hard all their lives.
CEO’s that make millions and then get millions in bonuses by sending production overseas, milking the retirement plans and ending health care for the workers that earned them, are best described as crooks and embezzlers. But, hey, if there are no regulations with which to prevent this stuff, well we are in fact encouraging such actions.
You seem to advocate letting the financial world run without regulations and then want to put guys who take advantage of the lack of regulations, like BARNEY FRANK and CHRISTOPHER DODD in jail. How do you plan to do so?
How about if your daughter who did so well with MacDonald’s got pink slipped tomorrow and lost all her benefits only because she costs the company too much?
You can’t enforce laws and regulations that aren’t there. You can’t have it both ways. Either you are for the money changers or against them.
Am I going to begrudge ALAN MULHAY of FORD his huge salary? Hell yes. His level of arrogance is demonstrated by his statements regarding his having no intention of cutting his own salary. To date, I am not aware of Mulhay seeing fit the rape the retirees as of yet so I will give him a bit of latitude.
Speaking if Ford, how are they preparing to weather the coming storm? Oh yes, updated products and Jaguar is gone but not Volvo. And there is still a huge overlap of models that seems to be the last thing Mulhay intends to address. In fact there seems to be little in the way of reducing overlapping models be done by anyone. GM dropped several lines but they still seem to need three or four suv’s from each division. Fiat-Chrysler hasn’t decided for sure what they are doing although there are a few good signs. Toyota is much too busy covering up their lack of quality to bother to rid them selves of three or four excess suv’s they are foisting on the American public as responsible transportation. Automobile-wise, I don’t see much encouragement from what has transpired over the last year and a half. There is a lot of shaking out yet to be done in world automobile industry. Certainly no place for big salaries/bonuses at this time. We shall see who survives. Right now, if I were a betting man, I’d go with the Koreans.
It is obvious that you read into what you want to interpret. Again, I am wondering where people get off stating that they begrudge other people their pay and benefits. If my daughter did get laid off, what to do? Sue, cry, grovel, bitch, what? Go to the union?? That, unfortunately, is life, and it has NEVER been fair. Unions BTW, Which are no better than any other big business, truly doesn’t care about the little guy except to grab his monthly dues payments. Wherever is it written that there are jobs, benefits, and work for life? Even the Soviet Union melted down, and that seems to be where you wish this country to go. You have to make a plan early, and work that plan so as to have it work for you. That is what my daughter would fall back on. And it wouldn’t be too long before she had another position somewhere else. People that want to work, will always find those jobs. Maybe not rignt away, but they are out there. Right now, Sea World in Orlando is and has been advertising for 750 NEW positions for the Summer. Guess what? Can’t fill ‘em. Who is kidding who?
I don’t know wnere you picked up the notion that I advocate letting the government run wild. I dispise the current state of affairs within and without this government. Been out of control for years, and no one gave a good tinker’s cuss until the FMae and FMac scandel hit, and the economy melted down. You don’t think the the double dealing Barney Frank and equally guilty Christohpher Dodd should not go to jail? How about LYING to an investigative committee? How about presentment of false documentation… THOUSANDS OF PISS POOR MORTGAGES, covered by Frank and his crony committees!Thank Harry Reid that it got swept away. He ought to be in the cell next to them! What? Make more regulations? Do do what?? Good GOD, enforce what the hell is already there!!!!! THERE ARE MORE LAWS, RULES, REGULATIONS that were violated THAT IT MADE AN ABSOLUTE JOKE OUT OF CONGRESS. Who cared? WHO DID ANYTHING? That is your government in action. Form a committee, spend thousands for calling witnesses, spend more thousands recording testimoney, spend more thousands making new rules that won’t be any better enforced than the MYRIAD of LAWS ALREADY IN PLACE. Go back and tell the public what a great job you are doing because you made a whole bunch of new laws……… which are NO BETTER THAN THE ONES THAT ARE ALREADY THERE! TAKE A LOOK AT THE UNITED STATES CODES sometime. It OUGHT TO MAKE YOU SICK!!
Think about Bernie Madoff. In the SEC sights several times, and the lame government employee, and there are PLENTY of them out there, sucking up your tax dollars, let it go because that employee and group DID NOT understand what it was that he was doing. Imagine that. Wanna bet that Barney Frank zoomed other government employees to cover his butt in allowing Mortgages that were CLEARLY AGAINST THE CURRENTLY WRITTEN LAWS!
Just to make it clear, I really resent you stating that I am FOR the money changers. It isn’t black and white, and there are just as many good companies out there that do care about their employees. That you may have worked for a poor one, is on you. You had to know whether you liked it or not, and there was always that option to leave it and go somewhere else.
And you begrudge FORD for paying ALAN MUHALLY the amount that they do….. ?? What is it up to you to do something about it? Don’t buy a Ford. Or a Volvo. Write the FORD MOTOR COMPANY and complain to the Board of Directors. But, it is still on you. I am pretty certain that he goes to sleep pretty well every night, despite your begrudgement of him. That doesn’t make any sense to me.
I was never a fan of General Motors to begin with. After having to drive Fords Police Interceptors for some years, I am not fond of that company either. But, there are good and bright signs for the future. If everyone felt as negative as you seem to be it would be a very sad world. It took some time for the companies to fall down, and it will take some time for the companies to come back, but they are doing that. Retaining Bob Lutz was a good move by GM. Making him assistant CEO was also a good and bold step. Ford will sort out their models. Sales will tend to do that. Chrysler has a good plan. They are moving far faster than I believed that they were capable, given the deep hole that CERBERUS left them in, after raping them out of house and home and leaving no products. Chrysler is selling cars. That means people are still looking, and visiting show rooms. I believe it will be a great ride for the future. Hydunai and Kia? Innovative, and doing something right. That new Genesis was a real marvel, and I ALMOST bought one before I stuck with my PT Cruiser. Never buy the first year production, and that is a good reason, although there seems to have been no issues with it. Don’t bet against FIAT-CHRYSLER. That is a good merger, and moving quickly.
Curtis, I’m 100% with you on this topic. Here’s the bottom line on executive pay: They will pay you whatever your perceived worth is. As for CEOs and other execs in publicly traded companies, that’s for the Board of Directors to decide. Sure, it is “the good ol’ boys club” to some extent and even lousy, under performing CEOs can not only get rewarded, but can somehow convince yet another company to hire them when they’ve worn out their welcome at the old place. So what are people so angry about? That these guys were smart enough and worked hard enough to put themselves in that position and you can’t? I have a friend who barely got through high school and started out as a contractor with a used dump truck and used backhoe and turned that into millions. You don’t have to be a genius with a list of degrees. Those perhaps make the road a little shorter, a little smoother, but not having them isn’t a show stopper unless you let it be. It’s called hard work. There is no such thing as luck except the luck you create yourself.
I could easily whine along with the rest of the crowd that feels they aren’t getting their fair share of the pie somehow. In recent years, my career has been impacted by some things I had no direct control over as well as some really bad job/career choices. If I had stayed on the path I was on ten years ago, I’d be able to retire next year at a fairly young age if I wanted to. Well, the events on 9/11 changed all that. Literally put my company out of business by mid-October 2001 because we were smack in the middle of renegotiating our $50 million line of credit when those dirty SOBs struck. The economy came to a standstill, the banks got nervous, wouldn’t sign-off on the funding for a company that had been profitable every quarter since it’s inception 15 years earlier. They forced us into Chapter 11 in a matter of weeks and Chapter 7 48 hours later. Not to mention that my stock and options in the company became worthless and, like a lot of post-9/11 victims, my other investments took a major hit.
So, in an effort to quickly recover what I’d lost, I’ve taken a gamble on working for a couple of high tech start-ups with an equity position. One didn’t make it after 2 years, and the other is limping along after 5 years of struggling. This latest economic hit isn’t helping them so my 4% ownership stake is worth….well, basicaly zero. So, now I’m back working for a multi-billion dollar international company but making a fraction of what I used to make mostly because I’ve put myself in a bad position and haven’t really taken the time to market myself effectively. I’ve gotten distracted and perhaps a bit lazy and have let the circumstances dictate my destiny rather than me plotting my destiny like I did previously. I keep telling my soon to graduate I hope) college kids not to fear a bad economy, but to find a way to leverage it and make themselves stand out from the crowd. Success and riches don’t come to the lazy or timid.
And that’s the essence of my point. Much like Curtis, I believe that America gives you the opportunity to be whatever you can be. I don’t begrudge Bob Lutz or anyone else being able to work their way into a position where they can command a higher compensation and benefits package. For 99.9% of them, they didn’t get their by chance. They got their by working harder and smarter than their peers. Plain and simple. If you want it, go get it. Not to say you may not have to make sacrifices along they way like how much time you spend on your career versus with your wife and kids. But make no mistake, the opportunity is there. If you’re employer isn’t paying you what you think you’re worth, do something about it. Invest in you skills and knowledge. Find another job. Start your own company. I know one thing, I’m not going to spend the last couple of decades of my working career settling for what I’m doing now. To squander what we’ve been given here in THE LAND OF OPPORTUNITY, would be criminal. This old dog isn’t finished learning new tricks just yet.
If I disagree with Lutz on any point, it’s that he has to remember he and a lot of other people might not have a job if it weren’t for taxpayer money. There is and SHOULD be some strings attached to keep the executives accountable for how the money is being used and repaid. Maybe some of the Boards of Directors out there should’ve done that long ago. Hold CEOs accountable. While Lutz’s concern about retention of key employees may be valid, that’s for the execs at GM and Chrysler to demonstrate to Congress and hope they relax the grip a bit. Go in front of them and make your argument. If someone does leave, seems to me that there are plenty of experienced auto people currently unemployed or under-employed that would love to have those jobs.
So you feel that Bob Nardelli’s contract at Home Depot was fair and that he deserved that pay?
If that’s true, I know a CEO who is WOEFULLY underpaid. He heads a hugely profitable company that has tripled in size and profit since he took over, produces a quality product with American labor, in a very competitive marketplace. His competitors have racked up several scandals and his company keeps the highest ethical and moral standards with low costs and high quality. He makes, including all bonuses, half what Fritz Henderson made.
And does anyone really think the new CEO of GM is worth the salary he’s getting? Really? Does anyone think he’s ten times better than Fritz Henderson was? Or that he’s a better CEO than Honda has?
Come on, we all know these executive salaries have no bearing on reality. Yes, every now and then you get a Bob Lutz or Walter Chrysler or Steve Jobs or whomever who is worth their weight in gold every ten minutes, but the grand majority of these guys are NOT up there because of their incredible administrative skills, they’re up there because of their schmoozing skills or in-the-right-place-at-the-right-time. And because the people who set the salaries are almost invariably in the same executive club they’re in.
I’m sure that if all entry level salaries were set by union people, they’d be subject to inflation, so why do we think salaries set by boards of CEOs, overpaid finance people, and professional board members are any different?
Well, if the CEO salary news put on allpar today is any indication, it is business as usual.
Curtis, where did you get the idea that I think you want to allow the government to run rampant? You are the most anti-government person I ever traded bards with. Also, your statement “It is obvious that you read into what you want to interpret” applies as much to you as it does to me. Or just about anyone else for that matter. It’s called human nature.
Again, you bring up Bernie Madoff and then say there are too many government regulations. Who is going to stop people like him if not the government? That being said, I most certainly agree there is such a mishmash of laws and regulations currently in place that it is nigh to impossible to get anything done quickly……….and properly. That does need to be rectified, soon.
I do not feel that all companies, corporations, businesses etal. are bad. In fact, I am a huge supporter of true U.S. based businesses. True U.S. meaning those that do their production on U.S. soil using U.S. workers.
I do apologize for any implication that you are in support of the money changers. My statement was intended as a very general remark but I now see that it well could be taken as an indictment against you personally. That was not my intent.
Truthfully I feel we share many of the same concerns. We just have very different points of view. And that is what makes forums such as this so great. It gives us all an opportunity to express our views.
Home Depot also dumped Nardelli, didn’t they? Why was that? HOWEVER, Home Depot hired him to do exactly what he was hired to do. General Electric, hired him to do the same thing, and he performed his functions well, until the quality began to be noticably poor. It still took a HUGE class action law suit to replace thousands of GE refrigerators to get GE to move, firing Nardelli,even then. But GE and HD both enjoyed the HUGE profits he made for them, didn’t they? Cerberus hired Nardelli to do exactly what they expected of him. Dump assets, rape the company, and fill Cerberus pockets with cash, despite all their public blather to the conttray. (Thanks Dan Quayle) But, in the end, what actually happened to him in ALL those companies. Why was that? Marchionne did not HESITATE one second to blow Nardelli out the back door.
Do you honestly believe that the GRAND MAJORITY of CEO positions are NOT worth anything, and that they all represent some sort of evil? That everyone that goes to work for those companies is a “slave” and usurped by that company? That the GRAND MAJORITY of the CEOs are NOT worth being paid other than a UNION scale wage? That somehow they wormed their way to the top by political means rather than ability? That is SO TYPICAL to smear and tar the GRAND MAJORITY of CEO positions when NOTHING could be further from the reality of things and not near anywhere of the truth!
How many companies are you including in the tar brush sweep of CEO positions? In reality there are hundreds of thousands of companies, small, medium, large in this country and the world. Do you now include Sergio Marchionne in the black bucket of tar because he got a nice bonus, and a great compensation package from FIAT? Not even an American company, but certainly falls under your tar brush sweep! So I presume then the Board at FIAT is as guilty of overpaying as an American Corporation, and is of the same executive (seemingly) exclusive club you accuse them all of being.
Frankly, I don’t care what GM pays for their executives. Nor Ford. Nor Chrysler. Or FIAT. It isn’t something that I have to say anything about, and for that matter, WOULD NOT WANT TO HAVE the responsibility to do so. I don’t know that much about it to render those sorts of decisions, and I dare to venture that the remarks being made that disparage them, are not based upon a viable set of hard line facts. Just recriminations, rumor mongering, and envy. It certainly is NOT something that I spend any time dwelling upon. Nor should anyone else because it just is not your business to do so.
And Dave, aren’t you a corporation owner? TOOLPAK and ALLPAR? Don’t you have a compensation package? Are you including yourself in the tar bucket along with the GRAND MAJORITY of CEOs? Did you not give an example of a corporation CEO that DOES NOT fit your sweeping tar smear in your own remark? If not then you cannot point to the two or three you are pointing to, and make the sort of remarks you are making, because they hardly represent the GRAND MAJORITY (your emphasis) of CEO positions out there!
And if you are then, would you want me to make the decisions about how much you are entitled to make? Or anyone with no real knowledge of YOUR business?
I have owned several business of my own over the years. It ain’t easy, and you know it! Every piece of paper, every single phone call, small endless issues, 20 hour days, and money issues are ALL ON YOUR SHOULDERS for decisions. Would you abdicate then your ability to make choices for your compensation package to me, someone OUTSIDE your sphere of influence to decide what I THINK you are worth??
If that is the case, then, I recommend that you IMMEDIATELY remove any and ALL advertising on ALLPAR that isn’t directly related to the CHRYSLER group of vehicles. I believe it is distracting, and demeans the Chrysler built vehicles that are represented by ALLPAR. Agree?
By what stretch would you imagine that would be the circumstances that would entail such a position for you or any CEO? What, toss the board out? Forget about what they represent? That is action outside the established body of HUGE amounts of over two centuries of American laws, and hundreds of years of court decisions, all to the contrary to your advocacy. Even if you are acting as a SOLE PROPRIATOR, you still have to make executive decisions, like a board of directors. Based on your tar brush, it is included.
Scott gives some great examples for his own situation. I don’t see him whining that the GM CEO makes too much money. Scott is concerned for his own situation, and as far as I can see, he has the ability, and self interest to make it happen for himself. That is America, and no one should be entitled to YOUR share of YOUR pie. You assembled the components, you made the ingredients come togther, and you baked it to your specifications. If you CHOOSE to share it, then that too, is YOUR decision to make, or not, as you opt it to be.
I don’t see what situation would justify cutting compensation for SOMEONE else, other than the hope that the cuts would be distributed out to other people! Of course now we have government ownership of two of the major auto companies with this so called “CZAR” in a position to make choices. (A RUSSIAN TERM that I deeply resent indicating some sort of titular head in government) An issue advocated by this government administration. There are hundreds of programs to give people a hand up, but to just give away money called “income redirtribution” from those working to those that won’t or don’t ……. is pure blatant socialism. That has NO place here in America. Or at least, it never should have a place in the land of unbridled opportunity for those that understand working harder or smarter means success for yourself.
Thank you John for your clarification. I began to wonder what happened in that we agreed with each other so much in the past. I too believe we have much more in common than we can share here!
My main government issue, after years of being a government employee is that yes, there are a myriad of laws out there. HOWEVER, it was up to guys like me to understand them, and act in the stead of “the people” to see that proper enforcement was initiated.
My good word, you cannot believe the duplicate, triplicate, and quadruple pile of currently existing laws that all aim at the same thing. I only mentioned Bernie Madoff once. It was BARNEY FRANK and CHRISTOPHER DODD that I mentioned more than once because they are immediately and nearly SOLELY responsible for the FMac and FMae situations with crummy mortgages. They did hide the truth, covered up thousands of illegally written mortgages, and allowed funding to private institutions that were also done completely illegally. When the hole opened in the dike, of course, it broke the down the wall, spilled over the dam, and we now are in the swamp of economic meltdown. The toxic waste from all those bad, illegal mortgages will take billions to clean up, and years to get past. The writing of new laws is only a panacea for the consumption of the uninformed great public unwashed. The laws are already on the books, and should have been enforced back in the Carter Administration. Yes, that far back, things began to slide downwards.
The point about BERNIE MADOFF is that the GOVERNMENT looked at him SEVERAL TIMES, and DID not understand what he was up too, and therefore, FAILED you and I because they took NO ACTION. Not even a cursory investigation. Had they done even that, the hair would have stood up on any of the near incompetent attorney types that seem to comprimise the SEC! John, think about that. And now apply it across the spectrum of all government agencies. I worked in one that was pretty independent (and quite effective thank you) up until Bush initiated the Department of Homeland Security. A pure boondoogle all aimed at increasing funding for those agencies (the entire 22) that combined under the DHS umbrella. Frankly, it dumbed my agency down. We got a bunch of numb nutted individuals put in charge of DHS, most dead wood from the FAA and the Military who could not get themselves promoted where they were. It will also take years before you can get rid of, IF EVER you can, those types of managers. They, do not want anyone to stand out. A good, solid, even tempered, middle of the road, intermediate level of employee is EXACTLY what the government looks for. Go above and beyond, and management will look to run you off. You become a threat to their position. Unless, of course, your management happens to be the best, and unfortunately, that sort of top notch personnel does not serve in government anymore. Of course, I expect that I will get flamed from those that do work in government, however, they know, or should know, that I speak the truth. If they don’t know, then they are just the sort of employee that management loves!
And just to make a note, I replied to the answer from DAVE, but for some reason, when I hit the submit button, it just disappeared. A neat webmaster trick to ensure that his answer is the definative answer. It has happened to a couple other things I have tried to post before when the Webmaster is involved. Not a complaint, just wanted everyone to be aware that you don’t have all the answers here, just as it is in life. Lets see if this one comes up.
First off, let me say what a huge fan of Mr. Lutz I am. He is one of the few giants of the auto industry. And, I agree that auto execs are currently underpaid if you compare them to other industries, especially the financial sector. BUT, they dropped the ball, bigtime, and that means someone has to pay. When you go to the government, or anywhere else, for help, they make the rules. I have never agreed with the huge compensation executives receive, but if they can convince someone they are worth it, more power to them. I think the board’s of director’s should be held far more accountable than they currently are. (after all that is their function, isn’t it?) There should be better oversight of executive compensation and it should be tied to the LONG TERM PERFORMANCE of the company, not quarterly reports. The biggest trouble is, after a year in which the working class has been decimated by their faith in our institutions, the shell game at top levels of government and business continues, with not a scent of remorse that I can see. No mass firings of the people who got us here; no financial revision; government hiring crooked executives; just more of the same old B.S. I don’t understand how “we the people” can be so complacent when there should be blood in the streets, especially Wall Street. Well, I guess we get the government we deserve.
Agreed. What’s more, if the government is going to be the #1 investor, they have every right to call the shots with regard to compensation.
No question but that the chief failure in comp, though, is at the board level. In Germany, there are requirements that the board include government and worker representation; that might be a bit far, or it might be appropriate. It’s hard to say what’s right. Personally, I think the ideal board would not be made up entirely of current-or-former-CEOs, accountants, and lawyers; it screws up the balance and makes groupthink inevitable. M&A and high comp become the modus operandi. How to change that without overbearing government over-regulation is the big question.
Stockholders no longer have real power except, in some cases, for a small number of extremely uberwealthy individuals and, in most cases, financial institutions whose members tend to make the same assumptions regarding “if a person performs well for $1 million, he will perform ten times better for $10 million.”
Some of the world’s best CEOs earn less than a million dollars a year.
I just want to mention one thing here — I am indeed a sole proprietor. That means I’m not acting with other people’s money.
I believe executive salaries are out of control at many large public organizations. I do not have definite ideas on how that can be changed. As I said, there’s a balance between ending the current situation, where the same people who will close an American factory to save a million dollars a year will give themselves a bonus of $10 million a year to reward themselves for it, and problems of allowing the government too large a role.
One thing that has become clear over time is that the current stock-holder representation system does not work due to the diffusion of stock. We do not have large enough blocks of stock held by individuals (other than the current CEOs) in most huge corporations to give them any real representation. I think perhaps corporate representatives and political representatives should be considering whether changes in stock ownership/representation can and should be made. Maybe money managers at the various funds should not get a vote. Maybe they should get a vote on some things but not compensation. Maybe CEO comp should be agreed to by a simple majority of the membership after the first year. I won’t pretend to be an expert here or to have good ideas. Just sayin’ maybe we should think and talk about it without bringing in ideology. Sometimes you have to be pragmatic.
I think one problem is that of perception – the crazy idea that if you don’t offer a huge salary, you will never get anyone worthwhile. Well, that’s true if you want one of the very few excellent leaders with a serious track record – Steve Jobs, Bob Lutz, Walter P. Chrysler, I’m sure you can add a bunch. The true turnaround artists as opposed to the Chainsaw Al Dunlop type that produces as long as they don’t hang around too long.
That said, the best guys don’t seem to work with a net. They don’t seem to demand multiyear packages with huge golden parachutes. Maybe those should be banned? After all, if you’re worth the money, you don’t NEED a guarantee. Not to mention that after your first ten million, you don’t really need the money, either. I fail to see how twenty million paid after you leave is a motivator for success. It would sure help companies that are stuck with lousy overpaid CEOs they can’t afford to fire!
BTW I do like the idea of forcing Congress to use the same health care rules everyone else does. Indeed, I think they should not have a group health plan at all. Why should we, the people, pay for Congress to remain in ignorance?