GM's Lutz: Auto Executives Are Underpaid
ORLANDO, Fla. - General Motors Co.'s top 25 senior executives, whose pay packages are being reviewed by the Treasury Department, are "way, way, way" underpaid, Vice Chairman Bob Lutz said.
His comments came as Treasury officials review the 2010 pay for GM executives, whose salaries must be approved by the agency's pay czar, Ken Feinberg, The Detroit News reported. GM is among companies that have received billions in federal money under the $700 billion Troubled Asset Relief Program.
The executives' compensation is expected to include GM stock, which might start being sold to the public late this year. If the stock appreciates, top executives could be in for a windfall.
But right now, salaries are lagging the market for top executives, Lutz said in an interview with The Detroit News on the sidelines of the National Automobile Dealers Association annual convention.
"What you see is what you get, and it ain't a lot," said Lutz, who is delivering a keynote address at the 2010 International Automotive Roundtable in Orlando.
"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."
The Treasury Department, which also is finalizing the pay package of GM's new CEO Edward Whitacre Jr. owns 61 percent of the Detroit automaker and invested $50 billion in the company.
A Treasury Department spokeswoman earlier this week said a decision on pay packages is due soon.
Feinberg had ordered a 25 percent pay cut for GM's then-CEO Fritz Henderson to $950,000 in October. Henderson resigned under pressure Dec. 1 and was replaced by Whitacre, who also is chairman of GM's board of directors.
Whitacre's pay eventually will be disclosed by the company in a voluntary Securities and Exchange Commission filing. The former AT&T CEO, who headed the company and its predecessors for 17 years, left in 2007 with a $158 million retirement package.
Feinberg ruled in October that salaries for GM's top 25 executives would drop by 31 percent, while total compensation would decline 20.4 percent. Just one other executive in GM's top 25, beyond the CEO, was to earn more than $500,000 in cash.
"Right now, that isn't a problem, but over time, clearly a company that under compensates senior executives is going to have a retention or recruiting problem," Lutz said.
Since Feinberg set pay limits last year, GM has hired a new chief financial officer, Chris Liddell, who will be paid in $750,000 plus stock awards.
Special adviser Steve Girsky, meanwhile, is being paid $1.1 million for sitting on GM's board of directors and for advising Whitacre. His pay includes $200,000 a year as a director and a monthly grant of salary stock valued at $75,000, or $900,000 a year.
The pay limits for GM's top executives are understandable considering the automaker's stay in bankruptcy court last summer, Lutz added.
"You can't go through Chapter 11 and come out the other side and expect to have all of the same perks and comps as you did before," he said. "We just hope it doesn't stay this way too long."
Lutz said GM needs to do a better job of scheduling production of hot-selling vehicles and balancing inventory.
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