DETROIT — If there is a crisis in the auto industry, it certainly cannot be seen when looking at the compensation of its top management. While autoworkers are being laid off, seeing their plants close and being pressured to grant health care and work rule concessions, those they work for are going in an opposite direction.
A Detroit Free Press analysis of the pay and compensation of 80 top CEOs at Ford, GM and 12 auto suppliers found their pay averaged $4.2 million in 2006. Total compensation for these executives rose 22 percent from 2005, when the average compensation was $3.5 million.
While Ford’s “The Way Forward” plan announced in 2006 will close 16 plants and eliminate 44,000 workers by 2009, its chief executive Alan Mulally was at the top of the compensation list with a total package of $39.1 million.
Although GM lost $2 billion in 2006 and is closing 12 plants and slashing 34,000 jobs, its chairman Rick Wagoner received $9.6 million in total compensation, a 75 percent pay raise from 2005.
Even more striking are the termination clauses many of the executives have. While workers receive a pink slip, auto executives get “golden parachutes.” These can vary from $71 million for Federal-Mogul’s Jose Alapont and $56 million for American Axle’s Alexander Cutler to $27 million for Ford’s Mulally and Visteon’s Michael Johnston.
One problem with executive termination clauses is that CEOs are “rewarded” when they lose their job through a change in control of the company — which they can help bring about — thus creating a conflict of interest that can influence them to make deals not in the interest of the company or workers.
UAW President Ron Gettelfinger told the Free Press in a statement: “During a period of plant closings, employment reductions, and other painful changes for workers and communities, it’s fair to ask whether executives are truly adding value in proportion to any compensation increases they have received.”
Come September, the UAW’s contracts with Chrysler, GM and Ford expire. The auto companies have indicated they will be expecting more sacrifices from the workers, which, if agreed to, will only increase the gap between executive and worker pay.