So it was about 1 week ago today that Frederick "Fritz" Henderson resigned his position as CEO of General Motors. Henderson replaced Rick Wagoner on March 31st of this year, at the request of President Barack Obama as part of GM's federal bailout and restructuring plan. This means that he was CEO for a total of 9 months, the same amount of time it takes for a woman to create a child. But did Henderson give this company a rebirth, or continue it down its path to doom?
In the original agreement with the GM, CEO Rick Wagoner agreed to accept a salary of $1/year while the company received federal bailout money (from TARP funds.) With Wagoner's departure so went that agreement, as Henderson refused to hold up the bargain in his place, instead receiving a total compensation valued at roughly $5.5 million for his 9 months as CEO. This means that he was paid $14/minute every minute for 9 months. Sleeping, eating, maybe working? $14/minute. Of course that is a completely unorthodox way of looking at it. So let's say for this period he was working 40 hours/week. This means that for the 9 months he was CEO he made nearly $4000/hour. This man made more in 1 hour that the average American household makes in a month.
What did Henderson do to elicit such high pay? Well, first his company filed for chapter 11 bankruptcy protection in June, just 2 months after he took over. Then, in the period post bankruptcy between July 10th and September 30th, he led his company to post a $1.2 Billion loss, while other automakers such as Ford and Toyota reported profits.
So if business is an incentive based entity, rewarding hard work and results with compensation, it should follow that the CEO of Toyota pull in a hefty compensation package this year as well right? I mean, they didn't accept any bailout money, they were profitable (at least for one quarter), they have a market cap over 6 times GM and Ford; but alas, it was announced on June 25th that Akio Toyoda (yes the name looks like Toyota, because his grandfather created Toyota,) is taking a voluntary 30% cut in compensation (which was already rumored to be <$1 million US dollars.) This is a prime example of the disease that plagues America, the reason why our economy is in shambles- greed. Pay for top executives has swollen in our generation to approximately 300 times the average worker salary. Historically, this number was closer to 30. The avaricious behavior of collecting maximum compensation while the company providing it deteriorates is demonstrative of the proclivity of these suits in general. They don't care the cost- whether it be to the environment, the consumer of their product, future generations, hell even the hand that feeds them- they want their money and they want it now. This sort of tunnel vision is selfish, destructive, and is unfortunately what our businesses deem acceptable. Gross.
photo courtesy of http://showitortowit.com/blog/wp-content/uploads/2009/06/rustygmlogo.jpg
It's the American way, Mat. Pure unadulterated gluttony - capitism, right - every man for himself. Money, money, money, at all cost. The sky's the limit... Nothing appears on the political horizon that would suggest that the Obama administration is willing to topple this gargantuan Altar to the Almighty Dollar (whatever happen to character and values, Tiger?). I just don't get it. I can understand the greed, i suppose. But nobody, who has the power to change this capital and horrific cavalcade of crime is willing to change it. Thanks for the good reporting and for taking a stand as our local watchman.
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