During the dot-com implosion, Cisco Systems (NASDAQ:CSCO) CEO John Chambers took an unusual step that set the tone for appropriate, responsible executive leadership during bad economic times. Now, the executive leadership at Ford (NYSE:F), General Motors (NYSE:GM) and Chrysler should follow the example Chambers set back in 2002.
Amid the dot-com fallout, Chambers received a $1 salary in 2002. That’s right: One dollar. Chambers also declined his bonus and gave back 2 million in stock options that year, according to CNet.
Alas, auto industry executives haven’t set a similar example.
GM CEO Compensation
According to the Wall Street Journal:
GM CEO Rick Wagoner got a 33% raise for 2008 and equity compensation of at least $1.68 million for his performance in 2007, a year for which the auto maker reported a loss of $38.7 billion. The salary increase puts Mr. Wagoner’s salary for this year at $2.2 million, compared with $1.65 million in 2007.
Moreover, the Journal says:
Mr. Wagoner was awarded 75,000 restricted stock units valued at $1.68 million, based on GM’s closing stock price in March. He was also given stock options representing 500,000 shares.
GM told the Journal that Wagoner’s total compensation is down sharply from $8.3 million in 2006.
My perspective: Yada, yada, yada. Why is this guy still running GM?
Ford CEO Compensation
According to the Journal, Ford CEO Alan Mulally received $2 million in base salary, a $4 million bonus and more than $11 million of stock and options in 2007. His base salary was unchanged over 2006. Mr. Mulally has earned nearly $50 million in compensation since taking the helm of the auto maker, according to The Wall Street Journal.
My perspective: Sounds like Mulally runs Ford about as well as Ford runs the Detroit Lions. Pathetic. Somebody sack this guy.
Chrysler CEO Compensation
Less is known about Robert Nardelli’s CEO package at Chrysler LLC because the auto maker is privately held, notes The Journal.
My take: Somebody dial Lee Iacocca. Fast.
The Bottom Line
I cover the high-tech industry for a living on TheVarGuy.com and I don't know much about the auto industry. But the situation in Detroit is pathetic. According to the Associated Press:
The leaders of the Big Three automakers have painted a grim picture of their financial position. They burned through nearly $18 billion in cash reserves during the last quarter — about $7 billion at GM, almost $8 billion at Ford and $3 billion at Chrysler. GM and Chrysler have said they could collapse in weeks.
If John Chambers was running one of those companies, he would have declined his paycheck, bonus and new stock options months ago. Instead of asking for government handouts, high-tech companies innovate -- again and again -- to stay in business.
Apparently, Detroit automakers don't know how to do the same.
Disclosure: Author provides consulting services for CSCO