In testimony before the House Financial Services Committee, Chrysler CEO Bob Nardelli agreed to match Lee Iacocca’s $1 per year salary if Congress would only give his firm their $7b chunk of the proposed automaker bailout. Ford’s Alan Mulally told the Committee he is “fine where he is,” and noted that he needs to make sure his executive team is “well motivated,” given the fact that the company is so not of the woods its deep within them. As usual, the worst performance was put on by GM CEO Rick Wagoner, who claimed to have cut his own salary by 50 percent. Not that he was lying, he just conveniently forgot to mention that he had reinstated it. To make matters worse, he played the Curly card (“I’m a victim of coicumstance!”). Red Ink Rick complained that he’d purchased GM stock “with my own money” which was now “worthless.” I’m paraphrasing here– I can’t take notes while having my mind blown. The idea that a CEO would buy his own company’s stock, oversee its demise and then complain about the losses to Congress in an attempt to get bailout bucks for the company that he flew into the ground is… awesome. This is the guy who has overseen eight years of lost profit, lost market share and cratering market cap. A Gulfstream jet setter who’s refused to step aside as a theoretical condition of a theoretical bailout. Then again, who’s surprised?
Update: Wagoner’s direct quote was “I have a significant amount of General Motors stock, including a lot which I’ve bought myself, which basically is valueless. ” Hear that stockholders? That’s leadership. Hat tip to ABC Political Radar
The classic moment was when the congress-person asked for a show of hands of CEO’s who flew commercial to get to the sessions….the silence was deafening…..
Even Mullaly was caught up short by that one….
Hey, the dudes flew corporate. They haven’t seen the inside of a commercial jet since they began destroying GM.
That is an absolutely brilliant photo.
Thanks for keeping the bastards honest, Ed.
At least RW is being well exposed for his role in GM’s mighty fall.
Drop the corporate jet issue-how many times are we going to play the class-envy card huh folks? Besides, it would have cost more to fly commercial-not less…don’t believe me? Follow along…
I’m taking a guess here, but this guess is based upon my experiences in and around their executive-level circles. Stop assuming that these CEOs travel alone-they don’t unless it’s a personal affair (paging Mark Fields and Steve Wilson!!) They always take their posse’ with them and their posse’ is usually their top 4-6 guys and gals who are experts in certain aspects of their business-think of the posse’ like a Presidential Cabinet; it’s kind of like that. Now each of the top 4-6 will have their own bodyguard, and each of the 4-6 will also bring along at least 2 of their support staff, RH-people, their management teams etc…So for their little trip to DC, they probably had 5 Executives, 5+ Bodyguards, 10 or more support staff and sycophants for a real rough estimate of about 20 people…Now assuming a $400 coach seat on a major airline RT DC/Detroit flight, you get an airfare price of somewhere around $8000…and that is just for one CEO and the posse’.
Now I don’t know what it costs to fly their corporate jets, but the owner of my wife’s company told me his jet runs him about $7000 per day…which is a touch less than the estimated $8000 to fly coach and we ALL know the CEOs and their posses ain’t flyin’ coach…so if you pay for them to fly first class, you can make that $16,000…Not cheap.
According to AirGroup out of LAX that leases corporate jets, HECK a big-old 737 can be leased for just $2311/hour…A mid-size jet such as a Cessna Citation V11 can be leased for ‘just’ $976/hour-Not bad …now since GM probably owns their own planes (they have 8 worldwide) or leases them from some company they created, the cost per hour could be even less…so flying the posse’ ain’t so cheap no matter how you do it, but flying commercial is not necessarily cheaper, especially when you bring ‘The Posse’!!
Now I could have guessed wrong-maybe they flew their corporate jets alone to DC, but I seriously doubt it, they probably brought the posse’ with them and if so, flying commercial might not have saved them a penny, but yes…allowing themselves to be filmed getting on and off their corporate jets was a baaaaaaaaad PR move, one just juicy enough to make the Bill O’Reilly’s of the world salivate…Please.
Stu,
You make a logical argument. However, most corporations have risk management rules that don’t permit more than a couple of top execs from flying together on the same aircraft… wouldn’t want to lose more than two empty suits in an accident. Therefore, they probably each used two of the corporate jets to fly their posse to Washington.
Plus, if my time at GM under Jack Smith is any indication, they probably had the advance team there the day before making sure they had the right bottled water in the committee room. But those are only VPs, so they flew first class commercial.
Seriously, though, I realize that there is added cost to having someone of this level wasting time waiting at the airport, having flights cancelled or delayed, or other indignities that normal people have to endure.
It’s more RW’s stubborn refusal to make any personal concessions that are earning no brownie points with Congress. Class envy or no, it’s untoward to lay off thousands of people give oneself a bonus for having to make such difficult decisions, and then come begging for handouts.
It’s their silence that grates. If they weren’t deeply ashamed of what they’ve done, and completely on the defensive, they would have answered:
“That’s a cheap shot. It’s much more effective, from a financial and work point of view, for us to fly in our corporate jets for such meetings. Particularly as we also have to carry out a lot of sensitive discussions during such journeys, etc …”
But because these guys are just treading water, they didn’t have the guts to say so — and that’s the trouble here. They didn’t say anything.
@Stu Sidoti
Take a look at this ABC news article:
http://www.abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
The gem is right here:
Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip.
I also saw this stat on CNBC this morning.
20 large to fly to washington! How many coach tickets can you buy for $20,000?
If Washington decides to bail these guys out, they better require that they fly coach as long as they have OUR money.
-ted
Zerofoo and everyone else….the $20,000 jet ride story was written by the great Brian Ross. Does that infamous name mean anything to you? Brian Ross was the Dateline NBC reporter who got caught red-handed rigging some GM trucks with explosives in his 1993 ‘investigation’ into GM gas tank explosions…GM was able to prove in court that he falsified the results by conveniently adding some nice oxidizing explosives to set off the gas tanks whenever he wanted. That little stunt got him fired and well…that should tell you all that you need to know about ABC News’ journalistic integrity.
I believe nothing Brian Ross reports and neither should you.
I do not care much about the CEO’s stance, expenditures, and life. I care about what we can get our hands on and trust. I trust intelligence, character, and openness. I like Ford’s CEO best for these things. Rick is lying, Chrysler is lying, in untrustworthy ways. And congress is to a big extent full of it. Most everybody in the news is full of a lot of fertilizer also. Its hard to accept my powerlessness and how life works. Thank God for God. I am one happy person, I have roof over my head and I am grateful.
Flying private jets is a side-show. The real story is that Congress needs to hold its nose, pass a loan package, and give the economy time to recover before GM has to pull the trigger on Chapter 11, which may lead to Chapter 7.
I am astounded at the myopia. No bailout will produce the Big 0. The costs to the economy will be devastating if the Big 3 are denied assistance.
Congress: Go ahead, save a dime to spend a dollar. Brilliant.
“The idea that a CEO would buy his own company’s stock, oversee its demise and then complain about the losses to Congress in an attempt to get bailout bucks for the company that he flew into the ground is… awesome.”
..so is that line. Poor Rick, indeed.
Jets for less than a $1000/hr. Maybe without fuel, crew, fees, and taxes. In my experience, with fuel back under $4/gal., it will run you more like $4000/hr.
Symbolic things huh. I wonder how the CEOs relationship to their money and life in general can be a real obstacle to working through issues with others. Can the companies and taxpayers come to an understanding or has their character really a problem to costly? How much are taxpayers getting in their own way? Is Congress much different than the CEOs? Can Congress really understand job losses? Are taxpayers asking for a magical CEO, a handsome humanitarian devoted to the U.S. economy and their jobs? Have they earned that much? What CEO/company sees it as worth while to do the right thing? Are they smart enough?
We know full well what they are thinking…
http://i415.photobucket.com/albums/pp236/Bear0013/Phun/say-what2.jpg
Of course we all remember Nancy Pelosi and the corporate jet she demanded as speaker of the house.
@tesla deathwatcher
That was Congressional Security, not the Pelosi-woman, which demanded a larger jet. Just to keep things straight.
The fact was used to attack her, but she needed the larger jet for cross-country hauls to SF. Earlier speakers made do with smaller jets, while still retaining a safety margin of fuel in their tanks, when going to their home states.
That said – I actually recognize the need for corporate jets at the level of GM, etc. Particularly in this instance, as they will have flown with a bevy of lawyers and will have conducted sensitive discussions.
But image is everything, and the saying is that richly dressed beggars do not get as much in their bowl.
RW should have replied “raise your hands if you paid for your own home improvements… oops, sorry Senator Stevens. “
Dana Milbank, WAPO:
There are 24 daily nonstop flights from Detroit to the Washington area. Richard Wagoner, Alan Mulally and Robert Nardelli probably should have taken one of them.
Instead, the chief executives of the Big Three automakers opted to fly their company jets to the capital for their hearings this week before the Senate and House — an ill-timed display of corporate excess for a trio of executives begging for an additional $25 billion from the public trough this week.
“There’s a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands,” Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. “It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn’t you all have downgraded to first class or jet-pooled or something to get here?”
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/19/AR2008111903669.html?hpid=topnews
Perception is everything.
Feel bad for the employees, just a little, but there are plenty other jobs that have bled out of today’s economy.
But face it, Big 2.5 have no one but themselves to blame.
Think back to every GM dealer experience, repair experience, you have ever had and now you know why most people would crawl through a mile of broken glass to buy a Honda after having owned a GM.
For a period of time there, pre-1990 basically, GM was making solid cars. But then one experience with a 1994 Grand Am did me in.
For a period of time there, pre-1990 basically, GM was making solid cars.
Whaaa?
Pre-1970, maybe. Recall (pun intended) the Citation. Or the Chevette, designed to compete with the Excel and Yugo. Or the Cavalier, which replaced the Monza, yet actually managed–and this wasn’t easy–to be worse.
And believe me, the hits kept coming.
“given the fact that the company is so not of the woods its deep within them.”
Somebody help me out here. What does this mean? I don’t know if it’s the phrasing, or if I really am in that much need of my morning coffee (distinct possibility).
“But then one experience with a 1994 Grand Am did me in.”
If your reasoning is representitive of many others (and I think it is) then GM is doomed. Even if the cars they make now are very reliable (and indications are that they are – at least the newer models). But why would one experience with one model of one year of one brand of a car turn you off to the whole corporation, including the trucks? Is it revenge? Were your feelings hurt that bad? I’m not being sarcastic, I really want to know and understand this angst among previous D3 consumers in general and GM consumer in particular.
Is it possible your car was a lemon? Were all 1994 Grand Am’s that bad? 1993’s? 1995’s? Was it not the car so much but the treatment by the dealer? Was it the lack of warranty coverage? Was the warranty expired?
What do you drive now? Has anything ever broke on it? How were you treated by the new(er) dealer/warranty claims? Have you overlooked any problems with your current car because the dealership service/repair experience was so much better? These are the questions that Detroit should be asking.
So much is differfent than in 1979 when Iacocca went for Chrysler’s loan from congress. Here we are with a north south divide. The southern states that have the new and non-union car plants versus the Detroit traditionalists. This thing has so many nuances that you don’t know where to start. Yes, the southern states paid people like toyota, and mercedes to build the plants there. They also gave tax relief on the properties. Further these were not loans but grants. As to the amounts, I don’t have the records, but it was far less than the bailout numbers. However, these individual plants don’t match the Detroit three in size either. Next, will the 85% of the non unionized US want to see their tax dollars pay for salaries of $75K per year plus pensions which could make it $150K a year? Does a $7.00 an hour minimum benefits Walmart employee want to subsidize the above? Will the entire domestic car industry vanish in bankrupcy, or will it shrink to maybe half it’s present size? Will the half that’s left be any better at fighting the foreign mfgs. than they have been in the past? Will the new administration encourage the foreign plants to unionize and thus level the playing field (although raising the price of all cars)? If we can answer just some of this, maybe we could know the future.
If Mullaly wants to motivate his executives, maybe he should set some goals to bring about long-term success at Ford. If you fail to meet your goals, you’re fired. These guys have been claiming the need for high salaries (the carrot) to keep “good” people for far too long, maybe it’s time to start handing out pink slips (the stick).
As a side note, I don’t think we should be paying for the travel expenses of any of our elected officials and certainly not for private jets. What ever happened to the idea of service to your country out of gratitude for what it provides you and out of a sense of responsibility towards your fellow man. I can only imagine how thick the slime trails were leading from the congressional hearings between the politicians and the car executives.
Shouldn’t they maybe have considered driving to Washington? I would like to see Wagoner suffer through an 8 hour ride in any of GM’s glorious Korean econo-boxes and still conclude that this is what the people wanted.
Its just stupid that the executives of the former big three are this tone deaf. If memory serves me correctly giving up the corporate jet was one of the symbolic gestures of Lee Iacocca in the early 80’s bailout
psarhjinian: The Chevette came out in 1976. An Opel based design [T Car] sold in Brazil, Japan, Germany, etc.
It couldn’t compete with the Excel and Yugo as those two cars didn’t come to the US until 10 or 12 years later. Even Car and Driver claimed it was the “most significant” car to ever come out of Detroit,[or something equally heavy handed].
The Monza was based on the VEGA and was meant to use the Mazda rotary built under license by GM. When that fell through, it was decided to shoehorn a v8 into the thing. So badly was it done the engine had to be dropped just to change the rear plugs. There is no way the Cavalier was worse. With a choice of bulky front heavy V8 or the Vega 4 or the Iron Duke ??? Buick and Pontiac versions got the V6.Olds could have the V8 or the Vega 4. L
Later in the run [1983?] there was also the option of a Brazilian OHC 1.8 in the 2000 and later the Skyhawk and Firenza that was better suited to the J bodies.
The Cavalier was shorter, had better interior room and gas mileage as well as a larger trunk [Monza trunk was about 6 cubic feet in the notch back] and, yes, better build quality.
And though there were five J Body clones, at the least they were better differentiated than the H body [Monza] clones.
The Monza was Motor Trend’s Car of the Year for 1975 for what that was worth.But then so was the Vega for 1971.
The Citation was Motor Trend’s car of The Year for 1980. The Xs were an immense hit as they put full size room in a compact [Monza size] body.
The Citation still holds the record for 1st year model sales at nearly 800,000 units. And as you mentioned held the record in recalls [until the Focus came along]. Had they been right from the beginning, those X’s might have set the course for GM’s future in a positive way instead of costing them untold #s of repeat customers.
Vauxhall & Opel used the J Body and helped in it’s development. They parted ways when GM wanted to develop an OHV engine for the US versions and IIRC the semi independent rear end. All well documented in Brock Yates book: “The Rise & And Fall Of The American Automobile”.
Say what you will about GM’s misfires, you don’t have to stray into exaggeration to find examples of poor product decision making over the past 30 years. They’re low hanging fruit.