GM Cuts Cash Payout to CEO After Weak 2004 (Reuters)

[Up2Late]

(Oh, The Humanity! How's a CEO supposed to make it on ONLY $9.9 Million Dollars total compensation?):sarcasm:

GM Cuts Cash Payout to CEO After Weak 2004

Fri Apr 29, 2005 05:41 PM ET

By Michael Ellis

DETROIT (Reuters) - Cash compensation paid to General Motors Corp. Chairman and Chief Executive Officer Rick Wagoner fell by 43 percent last year, as its automotive operations lost money on weaker U.S. sales and market share. GM, the world's largest auto maker, also said in a securities filing on Friday that cash compensation paid to its top five executive officers fell 37 percent last year versus 2003.

GM's net earnings fell to $2.8 billion last year from $3.8 billion previously, due in part to a $886 million after-tax payment to Italy's Fiat SpA to dissolve a failed industrial partnership. Including that payout, GM's automotive unit posted a loss of $89 million versus a profit of $995 million in 2003. GM recalled more than 11 million vehicles in 2004, a record for the auto maker. GM's U.S. sales fell about 1.1 percent last year, cutting its U.S. market share to about 27.3 percent for 2004 from 28 percent in 2003, according to Autodata.

Wagoner's cash compensation last year fell to $4.8 million from $8.5 million in 2003. He also received options for 400,000 GM shares valued at $5.1 million. In 2003, the company granted him options for 500,000 shares valued at $4.3 million at the time they were granted. The company didn't pay any long-term incentives to GM executives last year because the shares failed to hit a company target.

The Detroit auto maker's fortunes have worsened this year. Earlier this month, GM posted a first quarter loss of $1.1 billion, including a loss of $1.56 billion in North America alone, its worst quarterly result since it skirted bankruptcy in 1992. GM's financial deterioration has caused its shares to drop sharply, and ratings agencies to warn that it could downgrade the auto maker's debt to "junk" status at any time. Earlier in April, Wagoner took day-to-day control of GM's North American automotive operations from two deputies, a move analysts said puts his job on the line as he tries to turn around the money-losing business.

(more at link above)

[KlatooBNikto]

1. I am old enough to remember when GM used to scorn the cars made

by Honda and Toyota as little toys.This derision was based solely on GM's command of the marketplace at one time when it controlled about 50% of the market and was mainly worried about anti-trust actions if it exceeded 50% or greater share.

The steady erosion of market share, which currently stands at less than 25% and threatens to slip further, has made the old business model under which GM operated obsolete and downright dangerous.That business model was based on the idea of swamping the market with cookie cutter cars with different hood ornaments,grilles and head and tail lights so that consumers will buy them by the millions and justify the initial investments in tooling.It no longer works that way in the Brave New World of fragmented automotive market. You have to be able to make a profit on low volumes, you have to introduce new models every year or two,you have to be able to project an image of high technology and,of course, you have to offer quality and value at an attractive price.If you, GM, cannot do it someone else will.

This is a game beyond the ken of the monopolists at GM.They simply do not understand that their survival now depends on the attractiveness of their products.And their products stink.Their markets tell them so. The younger generation sees nothing in GM's products to stampede their way into the showrooms.When GM lost that market two decades ago, its future was over.The future has arrived and GM looks like a goner.

[Eloriel]

3. I haven't owned an American car since about 1978

Of course, I do understand that even foreign cars are made in the U.S. now, a point that worries me.

The engineering of German and Japanese cars has been so incredibly superior by comparison to U.S. cars all these years, and the workmanship too. The U.S. carmakers did it to themselves. I used to be very annoyed at "Buy American" campaigns by Labor, even tho I was and am a big Labor supporter, simply because IMO it's counterproductive to insist or even ask that people buy products that are basically lousy.

[mahatmakanejeeves]

4. "... and the workmanship too."

>>
The engineering of German and Japanese cars has been so incredibly superior by comparison to U.S. cars all these years, and the workmanship too.
<<

You might want to check into quality control problems with some of those German cars, especially Mercedes and BMW. Try, for example, the graph in the April issue of _Consumer Reports_. Numerous other sources report the same problem.

[Conservativesux]

7. It really depends on make and model. Some non-US cars are junk.

Not all new US cars are inferior to imports, folks.

Yes, they could have delevoped smaller, nicer, fuel efficent cars with quality, like the Japanese imports, much sooner but they are here on the showroom floors now.

GM is even rolling out the Hybrid bandwagon, so I dont see what all the fuss is about.

And, no, I am not a car salesman :)

[KlatooBNikto]

16. The problem is that they have lost the war of perceptions by long

neglect of quality.Even if they roll out new models equal to or better than Japanese or German cars, the market is telling them we don't like or want your cars. That is the problem.

[kysrsoze]

20. The bigger problem is that they make cars people don't want

Chrysler is the only US (partially) company that gets it. People have been moving back to cars from large SUVs for a couple of years and GM/Ford haven't strayed away from big SUVs as their main emphasis. I have to give Ford props on the Mustang though. Although it's still got the old "live rear axle" design, it's evidently quite a car and a big seller.

GM and Ford cars may have better quality these days, but they are sorely lacking in soul. The Ford 500 is a big letdown. It's underpowered and boring to look at. The Malibu, like all Chevy's is attrocious. Pontiac is, well, Pontiac. The GTO is a horrible seller because it looks like a bigger Sunfire. Buick has completely lost it on making cars for old people. Only Cadillac has seen some renewed emphasis on the whole car.

Stupid ol' GM is scrambling to make a new Camaro after the success of the Mustang, but where were they back in 2002 when Mazda came out with the RX-8 and Nissan brought out the new Z and G35? They don't know how to anticipate new trends in automotive preferences.

Now that the Japanese have renewed interest in performance and have their own excellent SUVs, it's going to be extremely difficult for Ford and GM to catch up. Japan will rule the automotive industry soon, including supercars like the Nissan GTR, the new Lexus supercar and the soon-to-be-revised Acura NSX.

Although the Germans have huge quality problems, mainly due to the cars' electronics, people are still scooping them up because they're interesting, luxurious and have good performance.

Lastly, GM and Ford license the hybrid technology from Japan, so lots of profit will go there. There is no emphasis on developing their own gas-saving technology - no common-rail diesels, electric car dropped, tec.

[mahatmakanejeeves]

21. I call this ...

>>
Although the Germans have huge quality problems, mainly due to the cars' electronics, people are still scooping them up because they're interesting, luxurious and have good performance.
<<

I call this the "Jaguar Effect." In the old days, Jaguars were notoriously unreliable. Even though they broke down constantly, the owners loved them. I hear they are far more reliable these days. Perhaps the unreliability crown has been taken by Land Rover.

[Up2Late]

22. "In the old days, Jaguars were notoriously unreliable...?

Jaguars still SUCK. I remember a few months ago, I was driving down the highway, when I came upon a brand-spanking new Jaguar, still had the temporary Dealer Tags (some call them License Plates) on it, and you could tell the wiring was screwed up on it, even at 70 MPH. This car was traveling 65-70mph down the highway, but the reversing tail lights were on.

Jaguar is a nice SECOND car, but not one to rely on as primary transportation. They still spend more time in the shop than they do on the road.

Once you go Toyota, you never go back.

[KlatooBNikto]

5. Basically lousy is the best description I have seen of American cars.

That description came about because, instead of seeking excellence, American automakers came to be ruled by accountants who disdained anything to do with technology and quality because they couldn't or wouldn't understand it.When they saw the ruin they had wrought they tried to change the perception but it was too late.

Now even if you shout from rooftops that our cars are as good as or better than the Japanese, no one is willing to believe it.

[llmart]

14. You may want to read and check out.......

some trade journals of the auto industry. German cars aren't exactly getting the highest marks for quality, especially Mercedes. I live in the Detroit area and my husband's an automotive engineer so I see these journals and hear about this quite a bit. And, in defense of the engineers and designers, some of them (like my husband) may be very good at what they do but it's the management above them that is more concerned about cost cutting to make the profits higher (so the execs can get bigger bonuses)than quality.

[Zenlitened]

2. Guess they really told him to shape up, huh?

Gee, that's quite a punishment he received.

Waddaya say, DUers, ready to take up a collection? We can't expect this guy to scrape by on $9.9 million, now can we?

:crazy:

[Senior citizen]

6. What a STRANGE story!

I'm so accustomed to big U.S. corporations rewarding CEOs for poor performance. It seems like in recent years, the worse a stock did, or the more a company's profits fell, the more bonuses they'd give the CEO. Something must have changed....

[LiberalFighter]

8. Not enough... he still received

too much in my opinion.

[Geo55]

9. Make something I'll buy, Rick

Compared, studied, thought about it quite a bit when last I was purchasing a vehicle.
Detroit lost.

keep burping up those SUV's , Rick.

[cosmicdot]

10. "so-called" greenhouse gases???

from last paragraph

"Also in the securities filing on Friday, shareholders have submitted five proposals to be considered at the GM annual meeting to be held in June. Among the proposals was one urging the auto maker to cut the amount of so-called greenhouse gases, such as carbon dioxide, from vehicle emissions. The GM board of directors urged shareholders to vote against the proposal, arguing that GM is investing in fuel cell technologies which promise to eliminate carbon dioxide emissions."


Board of Directors w/all their connections
`````````````````````````````````````````

Percy N. Barnevik Age 64 Joined GM Board 1996

Retired Chairman, AstraZeneca PLC, United Kingdom, since 2005; held office of Chairman (1999-2004); Honorary Chairman, Sandvik AB, Sweden, since 2002; held office of Chairman (1983-2002); Chairman, Investor AB, Sweden (1997-2002); Chairman, ABB Ltd., Switzerland (1997-2001)

COMMITTEES — Public Policy (Chair), Directors and Corporate Governance

AFFILIATIONS — Member of The Business Council, the International Investment Council advising the South African government, the International Advisory Council of the Federation of Korean Industries, the Advisory Council of Centre for European Reform-UK, Advisory Councils at the Wharton School of Business Administration and at Humboldt University in Berlin, and the Academies of Engineering Sciences in Sweden and Finland; Honorary Member of the American Academy of Arts and Sciences and Honorary Fellow of the Royal Academy of Engineering, UK

***FAMILIAR NAME***
Erskine B. Bowles Age 59

Chairman, Erskine Bowles & Co., LLC since 2003; Senior Advisor, Carousel Capital, a private investment firm, since 2002; Managing Director, Carousel Capital, and Partner, Forstmann Little & Co. (1999-2001)

DIRECTORSHIPS — Cousins Properties Incorporated

AFFILIATIONS — Member of the Board of Chancellors, Juvenile Diabetes Research Foundation International; Deputy Special Envoy for the Tsunami Recovery, United Nations

John H. Bryan Age 68 Joined GM Board 1993

Retired Chairman and Chief Executive Officer, Sara Lee Corporation, Chicago, Illinois, since 2001; held offices of Chairman (1976-2001) and Chief Executive Officer (1975-2000)

COMMITTEES — Executive Compensation (Chair), Directors and Corporate Governance

DIRECTORSHIPS — BP p.l.c., Goldman Sachs Group, Inc.

AFFILIATIONS — Member of The Business Council and the National Trust Council of the National Trust for Historic Preservation; Trustee of the University of Chicago and Life Trustee of Rush-Presbyterian-St. Luke’s Medical Center; Chairman of the Board of Trustees of The Art Institute of Chicago and Chairman of the Board of Millennium Park, Inc.


Armando M. Codina Age 58 Joined GM Board 2002

Chairman and Chief Executive Officer, Codina Group, Inc., a full-service commercial real estate firm based in Coral Gables, Florida, since 1979

COMMITTEES — Investment Funds, Public Policy

DIRECTORSHIPS — AMR Corporation, BellSouth Corporation

AFFILIATIONS — Chairman Emeritus of the Board of Trustees of Florida International University


George M.C. Fisher Age 64 Joined GM Board 1996

Retired Chairman and Chief Executive Officer, Eastman Kodak Company, Rochester, New York, since 2001; held offices of Chairman (2000) and Chairman and Chief Executive Officer (1997-2000)

COMMITTEES — Directors and Corporate Governance (Chair), Executive Compensation

DIRECTORSHIPS — Chairman, PanAmSat Corporation; Eli Lilly and Company

AFFILIATIONS — Member of The Business Council, the International Academy of Astronautics and the National Academy of Engineering; Senior Advisor for Kohlberg Kravis Roberts & Co.; Fellow of the American Academy of Arts and Sciences


Karen Katen Age 55 Joined GM Board 1997

Vice Chairman, Pfizer Inc, New York, New York, and President, Pfizer Human Health, since March 2005; held offices of President, Pfizer Global Pharmaceuticals and Executive Vice President, Pfizer Inc (2001-March 2005), Corporate Senior Vice President (1999-2001), Executive Vice President, Pfizer Pharmaceuticals Group (1995-2001), and President, Pfizer U.S. Pharmaceuticals Group (1995-2002)

COMMITTEES — Directors and Corporate Governance, Executive Compensation

DIRECTORSHIPS — Harris Corporation

AFFILIATIONS — Member of the Boards of Directors of Catalyst, the Pharmaceutical Research and Manufacturers of America (PhRMA), and the National Alliance for Hispanic Health, the RAND Corporation’s Health Board of Advisors, the National Board of Trustees for the American Cancer Society Research Foundation, the Healthcare Leadership Council, and the Economic Club of New York’s Board of Trustees; Trustee for the University of Chicago and Council Member of the Graduate School of Business; Appointee to the National Infrastructure Advisory Committee


Kent Kresa Age 67 Joined GM Board 2003

Chairman Emeritus, Northrop Grumman Corporation, Los Angeles, California, since 2003; held offices of Chairman and Chief Executive Officer (1990-2003) and President (1987-2001)

COMMITTEES — Audit, Investment Funds

DIRECTORSHIPS — Avery Dennison Corporation, Fluor Corporation, MannKind Corporation

AFFILIATIONS — Chairman of the Board of Trustees of California Institute of Technology; Member of the Boards of Directors of the W.M. Keck Foundation, The Broad Foundation, and Performing Arts Center of Los Angeles County, the Board of Overseers of the Keck School of Medicine of the University of Southern California, the Board of Visitors of the UCLA Anderson School of Management, the Advisory Board of the Massachusetts Institute of Technology Lincoln Laboratory, and the Board of Trustees of the Haynes Foundation


Ellen J. Kullman Age 49 Joined GM Board 2004

Group Vice President, Safety and Protection, E.I. du Pont de Nemours and Company, Wilmington, Delaware, since 2002; held offices of Group Vice President and General Manager (2000-2002), and Vice President and General Manager (1995-2000)

COMMITTEES — Investment Funds, Public Policy

AFFILIATIONS — Member of the Board of Overseers at Tufts University School of Engineering, the Board of Directors of the National Safety Council, and The Committee of 200


Philip A. Laskawy Age 64 Joined GM Board 2003

Retired Chairman and Chief Executive Officer, Ernst & Young, New York, New York, since 2001; held offices of Chairman and Chief Executive Officer (1994-2001)

COMMITTEES — Audit (Chair), Investment Funds

DIRECTORSHIPS — Henry Schein, Inc., Loews Corporation, The Progressive Corporation

AFFILIATIONS — Trustee of the International Accounting Standards Committee Foundation


E. Stanley O’Neal Age 53 Joined GM Board 2001

Chairman, Merrill Lynch & Co., Inc., New York, New York, since 2003, and Chief Executive Officer since 2002; held offices of President and Chief Operating Officer (2001-2002), President, U.S. Private Client Group (2000-2001), Executive Vice President and Chief Financial Officer (1998-2000)

COMMITTEES — Investment Funds (Chair), Public Policy

DIRECTORSHIPS — Merrill Lynch & Co., Inc.

AFFILIATIONS — Member of The Business Roundtable, the Council on Foreign Relations, the Boards of Directors of Memorial Sloan-Kettering Cancer Center, the Center for Strategic and International Studies (CSIS), and The Lincoln Center Theater


Eckhard Pfeiffer Age 63 Joined GM Board 1996

Retired President and Chief Executive Officer, Compaq Computer Corporation, Houston, Texas, since 1999

COMMITTEES — Audit, Investment Funds

DIRECTORSHIPS — Chairman, Intershop Communications AG; IFCO Systems, N.V.; Telefonaktiebolaget LM Ericsson

AFFILIATIONS — Member of the Advisory Board of Deutsche Bank


G. Richard Wagoner, Jr. Age 52 Joined GM Board 1998

Chairman and Chief Executive Officer, General Motors Corporation, since May 1, 2003; held offices of President and Chief Executive Officer (2000-2003), President and Chief Operating Officer (1998-2000); joined General Motors Corporation in 1977

DIRECTORSHIPS — General Motors Acceptance Corporation, subsidiary of GM

AFFILIATIONS — Member of The Business Council and The Business Roundtable, the Board of Directors of Catalyst, and the Boards of Trustees of Duke University and Detroit Country Day School; Chairman, the Detroit Renaissance Executive Committee

just filed Proxy
http://www.sec.gov/Archives/edgar/data/40730/000089016305000221/s11-5279_def14a.htm

[hatrack]

18. "So-called corporate leadership"

:puke:

[madmom]

11. With any luck he'll resign n/t

[unhappycamper]

12. Perhaps I've been asleep for a while. This is the first time I've

seen CEO compensation tied to performance in quite a while. As pointed out in an earlier post there has been little, if any, relationship between stock performance and CEO compensation.

Could the tide be turning? Does anyone have examples of this at other large corporations over the last year or is this a fluke?

[Rex_Goodheart]

13. Damn! How will he ever get by?

I want to return to the pre-Reagan years where the top tax rate was 70%.

[Demeter]

15. Well I Should HOPE So!

After all, even someone as disorganized as I am right now would be likely to notice if I were losing $1.1Billion in a mere 3 months!

[Jdude]

17. Awe too bad...

Maybe they should take away his health benefits like they are trying to do to their retirees. But that would cause him such hardship...

[newyawker99]

19. Hi Jdude!!

Welcome to DU!! :toast:

[htuttle]

23. Their compensation is base on the share price, not the net profit?

"The company didn't pay any long-term incentives to GM executives last year because the shares failed to hit a company target."

If you were wondering why the US economy is mostly smoke and mirrors, there it is right there. CEOs don't need to make money -- they only need to LOOK like they make money so that the stock price goes up.