The Wall Street Journal reports (subscription required) that "General Motors Co.'s search for an outsider to replace its chief financial officer is being complicated by the pay restrictions the Treasury Department is imposing on companies that received large bailouts from the federal government, according to people familiar with the matter."
GM is expected to be able to offer its CFO a pay package consisting of a significant amount of stock (Hah!) but a salary of only about $1 million per year -- not much for a company of GM's size and problems. Plus, ya gotta live in Detroit and work with Fritz Henderson.
As CFO of GM, Fritz Henderson presided over handling of the company's capital structure, including massive dividends when the company should have been paying down debt. He's the one who should be facing severe pay restrictions, but instead he's selfishly refusing to take a pay cut. In 2008, he was paid $8.7 million.
This is a perfect example of a politically motivated war on executive pay having the consequence of putting a massive taxpayer investment at risk. Not retaining the best CFO possible could cost the company a lot more than the few million it will save per year.
The government should be cracking down on the pay of executives who caused the mess that led to government involvement in these companies. But why punish outsiders brought in to try to clean up the mess and, by extension, punish the taxpayer whose investment is put at risk by these limits on executive pay?
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Reader Comments (Page 1 of 1)
10-19-2009 @ 12:36PM
Tom Wilkinson at GM said...
Sorry, Zac, you need to check your facts. Fritz Henderson will make $1.26 million this year (GM 8-K July 16, 2009).
10-19-2009 @ 1:21PM
D.N. said...
I'd be more concerned with the brain-drain GM is undergoing in the plants. In their zeal to reduce payroll, they've retired or forced out too many experienced salaried people in key areas like quality and reliability. That decision could come back to haunt them.
10-19-2009 @ 3:11PM
Kevin said...
Maybe I'd be bitting off a lot more than I can chew and likely be risking the relationship I'm in. But, I'd be willing to bet I could turn GM around within 3 months. I might suffer a stroke by the the end of 2010 for it. But, it's really leadership and direction that the company needs.
The funny thing is, I have no corporate leadership experience. I have plenty of school leadership experiences and a solid understanding of market research, and marketing experiences.
With GM its pretty simple.
Corvette: Need to increase the price of the ZR1 and increase the option list that accompanies it. There is no reason that car shouldn't have an Iphone dock built into the Dash.
Take the suspension system from the ZR1 and start offering it as an option on other models like the Z06.
Chevy: Each model needs to pick a customer and stick with it. Stop flutering around all over the market. Compete with the Camry, Accord and Fusion directly. Do continuous market research and slowly (yearly and subtly) update models accordingly.
Bring back the Pontiac Vibe rebadged as a Chevy with double the Toyota Matrix warranty, and don't charge a dime less than the Matrix price.
The Camaro just needs some decent aftermarket and some safety functions built in. If you are going after the weekend Dad you need to make it have functions that severly limit the power and speed avialable for when they lend it to the kids to look cool in.
Develop long-term nationwide car-care packages to offer customers by default from the dealer for both used and new.
Make the interface easy for customers, dealers, repair shops, and potential customers to be able to look at the and reasonably update the maintenance, smog, and driving history of a history of a vehicle by VIN.
Buick: stop mucking around the youth market, and start getting believable sponsorships or develop the car specifically towards your sponsorship strategy. No one believes Tiger Woods and Buick in the same boat. Cadillac maybe, but Buick?? Even worse, Buick doesn't even make anything in thier vehicles standard or optional specifically beneficial to golfers.
Cadillac: has a good strategy going after the midlife crisis crowd. If they brought on Tiger Woods a few other sports players along some sport specific vehicle options IE some hooks or holes in the back to hold golf bags. A sealed but outside vented space with dru air coming off the a/c compressor into for drying sweaty clothes quickly and keeping the smell from entering cabin.
Rebuild the Saab brand into a direct competition with Subaru/Volvo
These are just to name a few things wrong with the market strategy.
As for the operations strategy, seperate the union into groups, give them performance incentives based on problems per 100 units produced within 50k of driving. So, if a union worker starts in january, produces 5000 cars delivered to dealers by march. For each customer car that makes past 10k-20k then past 50k without problems needing warranty work in that specific area. That person/team gets some sort of bonus based on the reliability of the units they worked on directly.
Granted these incentives might take up to a year to kick in. But, once they do workers will see a semi-directly relationship with the quality of work they do effecting the paycheck they take home.
This would push quality control back to the teams/groups rather than trying to have 1 team analysing all data.