While many thought Montana's junior Sen. Jon Tester was on the right track when he suggested the chief executives of the nation's three largest automakers show their commitment to the companies - “have some skin in the game,” is how he put it - few thought they would actually agree. After all, none of the executives in charge of the financial companies now hoping to reap the benefits of the $700 billion bailout hastily approved by Congress earlier this year were asked to accept pay cuts as a precondition.
Yet just last week, Chrysler CEO Robert Nardelli, Ford CEO Alan Mulally and GM CEO Rick Wagoner agreed to slash their salaries if it would help their companies get a $25 billion bailout.
Nardelli, Mulally and Wagoner certainly seem to have learned something. They have teamed up to beg at the Capitol twice now, having been sent home the first time in shame for having the gall to plead for government assistance without presenting any clear plans to change the way their companies do business. Instead, they tried to place the blame solely on the faltering economy.
Of course, they did so after traveling to Washington, D.C., in three private jets - the irony of which seemed to escape only Nardelli, Mulally and Wagoner. They wisely chose to drive their company's own products to Congress for the second round of hearings last week.
Still, the idea of sacrificing some of their executive pay didn't seem to occur to two of the three until Tester, a member of the Senate Banking Committee, reminded them that Lee Iacocca took it upon himself to accept no more than a dollar a year when Chrysler accepted public financing during his tenure as CEO.
Nardelli was hired at Chrysler scarcely more than a year ago. Previously, he had earned $38.1 million in his last year at Home Depot; he left the company in January 2007 with an additional $210 million in cash and stock options - which put him in a good position to accept on $1 a year in pay at Chrysler.
Mulally has been at the helm of Ford a little longer, having taken the reins in October 2006. He made almost $22.8 million last year. And then there's Wagoner, who is by far the veteran of the bunch, having been CEO of General Motors since 2003. He received $15.7 million in 2007.
Last week, these three returned to the Capitol with more concrete plans - which not only included chopping their pay, but also ending management-level bonuses and selling corporate jets. The Banking Committee is expected to decide soon whether these changes are better late than never - or just too late.
While it's difficult to muster sympathy for the top brass who reaped millions of dollars in executive pay and bonuses as their companies slipped further into debt, it's equally difficult to turn a cold shoulder on those untold thousands of car dealerships and their employees who stand to be affected by a company collapse. In Montana, such dealerships employ hundreds of taxpaying workers who contribute to our local economic base, not to mention the hundreds of thousands of dollars they have donated to local charities over the years.
As Gary Bakke of the Missoula Area Chamber of Commerce noted last week, when Ford held a conference at Bitterroot Motors, “It is such an important economic driver in Missoula.”
It's clear the three major automakers are struggling. Car sales for Ford, Toyota and Honda fell a reported 30 percent last month. Ford and GM are both billions of dollars in debt, and GM and Chrysler are both warning that they could be forced into bankruptcy at any moment. For its part, Ford claims to be in a better position, saying that it needs a $9 billion loan only as an emergency backup.
A line seems to be forming in the halls of Congress, a line made up of the heads of struggling corporations hoping for emergency backups, bailouts and whatever else they're calling taxpayer money these days. We sincerely hope that, as they await their turn to solicit funds from the public trough, they will ponder the fact that their massive salaries, enormous bonuses and unseemly retirement packages also come with a huge helping of accountability.
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jt wrote on Dec 10, 2008 9:16 AM:
The "Czar" or Congress should also require the Big 3 to support California's green
house gas waiver request. "