General Motors Corp.
Summary:
The future of this company depends on these execs making a late push to adapt to the Toyotas and Hondas of the world. So far their performance has been very underwhelming. Maybe they should focus on cutting costs in the executive pay program instead of the factories that make their company go.
Analysis:
It's no secret that auto manufacturers have struggled in America. They have faced extreme competition from companies, primarily automakers from Japan, with more efficient processes and fuel-efficient vehicles. Automakers like Ford and General Motors have had trouble adapting to this new trend and are really suffering now that oil prices have gone through the roof.
This is not a new phenomenon. American automakers have been faced with these issues for well over a decade now, as evidenced by GM's steadily declining stock price, going from the mid $90s to a recent low of $17.50. Although GM's price per share rebounded in 2006 and into 2007, it came crashing down after dramatic increases in oil prices.
So what do executives make for not seeing the obvious warning signs and refusing to adapt to a changing market place in spite of decade-long losses? We don't expect much.
So… What Are They Paid?
The CEO and NEOs are making average amounts in salary ($1.6 million and $1.1 million average, respectively). Bonuses were not claimed, but non-equity incentives were. The bonuses give out were below the target bonus, but not as low as the threshold amount. The CEO received $1.8 million and the NEO average bonus was $760,000. Shouldn't this be zero? Or at least the lowest amount on the range? Maybe the compensation committee sees another set of numbers we don't see.
Moving on, we see that stock and option awards were low to average when compared to other companies in the DOW Jones Industrial Index. Nothing special to report here.
There were a few areas for concern in the perquisites section. Security costs, for instance, were not only high for the CEO ($165,000), but also for one of the NEO Henderson ($161,000). What about personal use of company aircraft? Well, the CEO's usage was low, but NEO Lutz racked up $190,000 in incremental costs. It's not as if the pension plans are small either. Rest assured the GM execs will be well taken care of when they decide to hang it up.
The executive compensation program for GM just looks average. The pure numbers being awarded the CEO and NEOs are average or low, but they should all be very low with how poorly the company has performed. We're also concerned that the bonuses they make (sorry… "non-equity incentives") will be there regardless of performance. The bonuses can still grow to enormous amounts, but cannot go to $0 for a poor performance.
Compensation Details:
| CEO | NEO Avg. | |
|---|---|---|
| Base Salary | $1,558,333 | $1,070,834 |
| Bonus | $0 | $0 |
| Stock | $2,561,113 | $1,603,149 |
| Options | $3,776,710 | $1,357,100 |
| non-Equity Incentives | $1,802,000 | $757,750 |
Reference Links:
(1) Annual
Proxy Statement
(2) Annual
Report