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.