Think the $10.2m salary and bonuses Rick Wagoner took home in 2006 is outrageous? That's chump change– at least compared to what Business Times reports Wendelin Wiedeking reeled in last year. Porsche's president finished the year with his bank account €70 million healthier than when it started. That's $103.7m folks. For one year. The fat cats on the management board shared in the bonanza, splitting €113 million ($166.9m) between themselves. While it's true Porsche is the world's most profitable auto maker, less than half of its profits come from making autos. While the company reported €5.86 billion ($8.65b) of profit this month, €3.59 billion ($5.3b) came from stock option profits– most of which are "paper" profits on options to purchase more of VW. Porsche finance director, Holger Härter, describes the monetary machinations as "options on options on options" but denies there's anything shady going on.
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Wow! €70 million for basically, being a puppet! Let’s face it, Ferdy Piech pulls the strings at Porsche (much like he will at VW).
If Ferdy is reading this, I’ll quite happily do the same job as Wendelin Wiedeking for a 1/5 of the salary!
€70 healthier than when it started. That’s $130.7m folks.
Actually, 70 euros is $130.70 ;-)
That would be the lowest salary ever.
Anyway, I’m really surprised that it went down, as european execs salaries are typically lower than their american counterparts, and the whole salary structure is much more compact.
looks like some execs are trying to break away from moderation in salaries. If anything, I’m not surprised it starts at Porsche.
@KatiePuckrik:
If you think turning an almost bankrupt sportscar producer into the most profitable automaker on the planet is a puppets job, than I’d like to have one of those amazingly smart puppets you must have played with as a child.
Look, we all get that you have profound aversion against anything Volkswagen-related (your numerous daily posts show that quite clearly), but implying that Wiedeking is just an externally controlled yes-man is beyond ridiculous.
Frank, please explain this for me, Porsche is the most profitable auto maker??
That’s an insane amount of money for one year’s work, but if there’s nothing fishy about the books, and they made that much profit, I think he deserves it. They obviously are not struggling in the market place, so let him enjoy it.
@musah:
Yes indeed. While bigger carmakers may make more money in absolute terms, Porsche has the best profit margins in the industry.
@Orian: My guess is that he agreed to a strongly performance-related contract way back when Porsche was struggling, so he’s reaping the benefits now.
AKM €70 healthier than when it started. That’s $130.7m folks. Actually, 70 euros is $130.70 ;-) That would be the lowest salary ever. Funny how everyone else understood there was a missing "million" there. BTW, it isn't the "lowest salary ever". Lee Iacocca worked for $1 when he was rescuing Chrysler in the 80s.
For those complaining socialists, did any of this money come out of your pockets? If you contributed to his salary, I am sure that you got something worthwhile in return, as in a Porsche. Contrary to some opinions, these guys do work. They provide the direction for the company, put in long days of travel, etc. If you look at the profitability of Porsche, it looks like he earned his pay.
1996MEdition, nobody in the whole word has ever in the history of anything done enough to deserve 130.7 MILLION DOLLARS for one year of work. There is absolutely no way that this fellow has done 3735x the amount of work that I have done, even though I have a low productivity rate due to reading car blogs all day.
If he was working 24 hours a day, 365 days a year (no sleep or vacation for the mighty executive), he still earned almost $15,000 an hour. I don’t care what kind of a management genius he is, nobody is worth that much money. Companies could do far more for themselves and the world if they would reinvest that money into product improvements and development. Call me a pinko socialist if you will, but I’m pretty much disgusted.
Good for him. Cash ’em while you can.
The great thing about capitalism is if you dont like what he’s paid, you can choose not to buy their products or invest/work for their company.
I would like to see a break down of their profitability though. We routinely hear that the low volume auto mfrs make loads of profit while the large ones are always in the negative. Why is that?
Isn’t Porsche a private company? If so, wouldn’t the “European” Executive Pay Schedule not typically apply in this situation? i.e. lower salaries than American counterparts.
kazoomaloo
Typically, these big payouts are the end pay for several years. Usually they are performance based and are in line with the profits of the company. The board of directors decides the compensation. If you think it is out of line, buy into the company and voice your opinion.
The nice thing about capitalism is that everyone has a chance to do something like this, you just have to work really hard for it (i.e. Sam Walton). I am sure Wendelin Wiedeking did not just walk into Porsche off the streets and say “I would like to apply for the CEO job opening.” You work your way through the ranks, sacrifice for the company, and earn these positions.
kazoomaloo: There is absolutely no way that this fellow has done 3735x the amount of work that I have done
I don’t know if this particular dude “deserves” his pay or not, but he’s not being paid based on the quantity of his work like some kind of sweatshop loom jockey, he’s paid based on the VALUE of his work.
If a man’s talents and skills actually could bring in an additional, say, billion dollars for a company, he’s worth a hell of a lot more even than $103 million.
I only get worked up about executive pay when the executives are doing more harm than good and still make the big bucks. (*cough* Rick Wagoner)
Kevin,
I’m not sure I agree with your thinking there.
Particularly, in the company I work for, shop floor staff are encouraged to think of new ideas to save the company money and we do think of many good ideas which are implemented. I, myself, have been responsible for tens of thousands of pounds of new business for the plant I work at.
However, at no point were any of us given a portion of the money saved from our ideas.
So to say, if Mr Wiedeking can bring in a extra billion dollars for the company, then $103 million dollars is a price worth paying, is unfair. All members of staff can save the company money, it’s only ever the managers who actually see it!
Also, I do concede a point. At least, this guy is running a firm which is MAKING money! He’s done something right. Mr Wagoner on then other hand……
Katie-
While your company may not do so, many others do offer compensation for cost saving ideas.
In general-
That said, I’ll jump in a bit on this lunacy.
It is a misconception that hard work = money.
As Kevin pointed out its about what VALUE your superiors see in your work (and they may be the customers, as a number have noted).
I am not saying everyone making whopper bucks deserves it. So what? I’ve worked with plenty of people at all levels who didn’t deserve ANY pay. They were actually detriments to their employers.
Big bucks come your way typically in two ways IMO.
1. Be willing to take on large risks financially (or build to it).
2. Be willing to take on large responsibilities.
(see Alan Mullaly on that)
Keep in mind, when someone runs a successful operation a large number of people who did nothing but punch the clock and do their basic job (which is OK) benefit.
And if you don’t like where you are at on the food chain then do something about it! Take some risk. Grab some resposibility.
Social envy is sad.
BTW-I not close to rich…yet. ;^D
Bunter
This is chump change compared to what he’s made for his boss Ferdinand Piech and the Porsche family. Wiedeking turned Porsche into an enormous cash cow, which they’ve now used to buy VW. VW stock has soared, and the Porsche/Piech family has made billions. It’s how successful capitalists work.
Katie, I’m not spouting some zany new crackpot theory, this is just basic economics. If you can boost your profits by $2 by spending $1, you’d be stupid not to do that (unless better yet you only need to spend a half dollar, or nothing at all — which is what your employer did). This is investing: you put £100 in the bank so that at the end of the year you’ll have £105. That beats stuffing it into your pillow case and making no interest at all.
Economists just formalize this by saying a firm should increase output until the marginal cost equals the marginal revenue — that’s how you maximize profits. If they don’t do that, they’re leaving additional profits on the table for no good reason.
Now I’m not saying actual companies can do this efficiently with all their employees. In dealing with a lot of rank-&-file employees there are a lot of messy real-world issues, such as 1) it’s often difficult to really identify and track exactly how much value individuals create 2) even if you can, you must consider the problems of distorting the payscale to benefit one person, and the personnel problems that may cause (such problems add to the cost), 3) how do you reward employees for a non-repeatable one-time improvement? etc.
But the rules are different for high-end execs with a lot of organization & political power in a firm, and they do stand a chance of being well rewarded. That’s just the way it is if you want to be able to hire people with those very rare abilities. (And they are rare, no matter how much we dislike a lot of them). Because a person in that position may actually be able to accomplish something that does increase revenues and profits by billions of dollars, and they can sit down with the board of directors and make their case for what they’re worth.
Kevin, you’re not fooling anybody with your false Wall Street “Greed is Good” logic. The reason top executives are overpaid so hugely is because they control the purse strings, along with the board of directors who also are almost always overpaid.
Stanley O’Neal, the man who presided over the loss of several billion dollars at Merrill Lynch until he was fired a few months ago, is walking away with $160 million dollars in pay this year. Because like most CEO’s he had the board of directors in his pocket. That’s just this year, it doesn’t include prior years pay. Google him. How does that fit into your executive compensation dogma?
Porsche is profitable because nothing they make is cheap. Couple that with a seemingly endless demand for their product and it’s easy to see why they make so much money. How much does it really cost to make a 911 Turbo? I’m guessing that they have gross margins of well over 50% on that model, something that’s just not possible on models that sticker at under $25K.
That’s also why I’ll probably never buy a new Porsche. I just can’t justify the premium no matter how good the car is. There are too many less-expensive alternatives.
The correct salary comparison is with private equity or hedge funds rather than manufacturing industry as most of the 70M euro is a bonus based on exceptional trading profits earned for shareholders: 3.6 Billion euro in one year.
Wiedeking’s actual salary is 7M euro. Much less than the ceo of a similar company would get in the US.
“Porsche profits by CFO’s hedges” FT: http://tinyurl.com/2b2g7f