Capping Executive Pay At GM
General Motors still owes the federal government something in the neighborhood of twenty five billion dollars from the bailout it received back in 2008. Consequently, we the people still own a little more than a quarter of General Motors stock. So as the largest single holder of the stock, the Treasury Department is exercising its authority to limit the compensation package for General Motors executives.
The United States Treasury has instituted a freeze on GM CEO Dan Akerson’s salary preventing him from earning a salary more than his $1.7 million pay last year. No doubt Mr. Ackerson feels he’s being ripped off. His predecessor, former GM CEO Edward Witacre, earned nine million dollars to lead the run of GM into the equivalent of corporate welfare. But if misery loves company Mr. Akerson can take solace in the fact that the Treasury Department has placed caps on the compensation packages of about two dozen of the company’s highest paid executives for 2012. As a result of these salary caps, the executive pay at the company has dropped by nearly twelve percent over the last year. That’s a good thing for a company that still owes me twenty five billion dollars. That’s a two and a five with nine zeroes bringing up the rear.
Feeling that the government’s move is somewhat out of line, GM says that the move made by the government to curb executive salary spending is impeding its ability to operate. The company says that there is significant risk of executive turnover if the government continues to interfere with imposed salary limits. Luring and maintaining top talent will prove difficult if the company can’t compete for high quality executives with the rest of the automotive industry. Judging from the past performance of General Motors executives that were paid top dollar to come and destroy the company, it sounds like the company should be thanking the Treasury department.
To be fair while Mr. Akerson’s $1.7 million salary along with all the other perks that gives him a paltry nine million dollars in total earnings, over at the one domestic automotive manufacturer that didn’t ask for help with its finances from the government, Ford Motor Company CEO Alan Mulally’s compensation package totals nearly thirty million dollars. From Mr. Akerson’s perspective, who’d want to run a global conglomerate for such a measly compensation package? Considering the demands of the high profile job of running a global conglomerate like GM and the jet setting lifestyle that comes along with it, relatively speaking nine million dollars is not even close to corporate executive minimum wage. I’m sure Mr. Akerson would rather go to work on the assembly line where those union workers are just raking in the dough with their starting pay of something like twenty dollars an hour.
At a time when fiscal responsibility forces us to make hard financial decisions regarding pay packages for people at the bottom end of the financial ladder, it has become standard procedure to inspire people to work harder and do better for themselves by cutting their pay. At a time when people make the argument that we can help get our national economic house back in order by cutting investments in people at the bottom of the financial spectrum. If we cut investments in what we spend on education, if we change the rules for healthcare so that corporate America can make more profit by cutting more people from coverage, if we allow the federal minimum wage to be dropped so that we can hire more people to work for yearly wages that would barely pay Mr. Akerson’s salary for a day, and tell the masses that this will be good for them, wouldn’t the same thing be true for people at the top?
And the threat that top executives will abandon ship to go work for other companies or it would be hard to recruit talent to help run the company without the freedom to pay top people top dollar is a truly empty threat. Nobody is worried about the top performer on the assembly line leaving to go work for somebody else when their pay is frozen. The thought is that if the assembly line worker wants to leave, let them. There are plenty of other people who will do the job. The same is true for top executives. If they want to leave then let them. There are plenty of other people who are qualified to the job, waiting in the wings ready for their chance to shine in the executive boardroom.
With all that said, if Mr. Akerson and the rest of the General Motors executives feel that they are being unfairly singled out then too bad so sad. Until you pay off the loan you have to live by your benefactor’s rules. Pay us our twenty five billion and you can go back to running your company into the ground again if you like. But until then, if you don’t have the funds to pay your bills then you don’t have the money to pay the lavish salaries that your competitors can.
Besides, if the only reason your executives are staying is because they have a fat compensation package, then it’s no surprise why GM went down in the first place. A lot of people work their jobs because they love what they do. A lot of people work with the understanding that even though they only make tiny fraction of Mr. Akerson’s compensation package, they love their job. Teachers, firemen, police, farmers, information technology workers, automobile mechanics, assembly line workers, truck drivers, chefs, delivery drivers, and many more will go to work simply because they love their jobs.
Maybe if General Motors focused more attention on hiring people who loved to make cars more than they loved to make money that company wouldn’t owe anybody twenty five billion dollars in the first place.