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Chrysler execs get millions while asking for US aid

by David Zatz on

DaimlerChrysler left Chrysler with a “retention incentive plan” which will give around $30 million in bonuses to 50 executives, according to the Detroit Free Press in a story affirmed by Chrysler’s Nancy Rae, executive vice president for human resources and communications. The story notes that Rae said the plan made sense at the time, because Daimler wanted to assure buyers that key executives would stay with the company after it was sold — and that the plan would probably have been reconsidered had Daimler known what the future would hold.

The retention plan was created in April 2007. Chrysler, GM, and Ford are asking for another $25 billion in low-cost loans from the government; Democrats have pledged to limit executive pay as part of any agreement. However, the $700 billion bank bailout does not have any restrictions for existing compensation plans or golden parachutes

A large chunk of the $30 million is pledged to just six executives who will receive large bonuses if they stay through August 2009, according to the Freep article:

  • Frank Ewasyshyn, executive vice president, manufacturing, $1.89 million.
  • Frank Klegon, executive vice president, product development, $1.8 million.
  • Nancy Rae, $1.66 million.
  • Simon Boag, president, Mopar/global service and parts, $1.65 million.
  • Steven Landry, executive vice president, North American sales, $1.63 million.
  • Michael Manley, executive vice president, international sales, marketing and business development, $1.53 million.
  • One quarter of the bonuses has already been paid out, in February 2008, the rest is set to be paid in August 2009. Bob Nardelli, Jim Press, and Tom LaSorda are not part of the plan, but LaSorda already received a nearly $16 million bonus from Daimler in 2007 (partly for voiding his employment contract, which would have lasted through to 2012), and was paid around $21 million in 2007 alone.

    Chrysler has issued a formal response: “Shortly after Daimler AG said in February 2007 that it was considering selling Chrysler, Daimler executed retention agreements with a select group of senior Chrysler executives. These executives are a small percentage of the senior leadership team in key positions that, at that time, were deemed critical to the operations of the Company in the event of a change in control. Retention agreements are a standard business practice and are put in place to protect a potential buyer from losing key managerial talent.”

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