Chafing at the strings attached to the government bailout that saved them. Using loopholes and workarounds to pay themselves lavish salaries.
Who does General Motors think it is, Goldman Sachs (NYSE:GS)?
OK, that's not quite fair. Leaders of the beleaguered auto giant have quite a way to go before they reach Goldman's level of unabashed self-enrichment. But there's still some reason to raise eyebrows.
In an SEC filing released after the market closed last Friday (first rule of PR: If it's bad news, drop it on Friday afternoon), GM made two announcements: first, that it has received "approval in principle" from the feds to pay new CEO Ed Whitacre a cash salary of $1.7 million a year, plus stock options and assorted other incentives for a total of around $9 million, retroactive to Jan. 1.
For reasons I'll explain in a minute, I don't think that's a big deal. But here's the announcement that gets me: GM has retained the guy it dumped, ex-GM lifer Fritz Henderson, as a 20-hours-a-month "consultant" -- for, in GM's words, "a fee of $59,090 payable monthly and reimbursement of reasonable expenses."
That's $2,954.50 an hour. To get advice from the guy the company fired.
Here's some advice that costs considerably less
If GM wants some advice, here's some it can have for free: Cut the cord with your past. Not the tail-fins-and-red-Corvettes past, but the more recent past of executive obliviousness and complacency, the one we all thought the company would cut when it dumped Henderson in December.
Look, I get that this is intended as a relatively short-term thing. I get that GM's PR flack says that ol' Fritz has "unrivaled expertise" in "international operations," whatever that means (maybe it means operations like GM's European division Opel, which Fritz tried to dump). I get that maybe having the guy available for the occasional conference call seems reassuring to the new boss, who after all came to the job from way outside Detroit.
I even get that Henderson didn't receive severance after he was fired, and that's unusual -- CEOs ousted from companies such as Starbucks (NASDAQ:SBUX), Hewlett-Packard (NYSE:HPQ), Convergys (NYSE:CVG), and Seagate (NASDAQ:STX) in recent years all received lovely dollar-denominated parting gifts as the doors swung shut behind them.
But.
I'm having trouble seeing three grand an hour for a guy who was CEO for only a matter of months and probably shouldn't have had the job in the first place. I'm having trouble understanding why retaining a guy who personifies the old way of doing things makes sense, given that Whitacre has been telling insiders how frustrated he is with the pace of change at GM.
Henderson didn't run GM into the weeds all by himself. He's not a villain. But as an old-guard CEO at a moment when the company desperately needed a change of course, he was the wrong guy in the wrong place at the wrong time. And he's still the wrong guy, and it's still the wrong time.
Long story short, I think retaining him right now sends a lousy message.
About that raise for Whitacre
On a different note, as I said above, I'm having trouble getting too upset about Whitacre's compensation package. While it's a bit more than the $1 a year that Ford (NYSE:F) CEO Alan Mulally promised to get by on if his company ever had to use government loans, $1.7 million (plus some stock that may or may not be worth something someday) isn't exactly a huge payday for Whitacre. After all, the former AT&T (NYSE:T) CEO retired with, shall we say, a comfortable sum in his bank account.
Whitacre's a big name with a huge job in front of him. Speaking as an American taxpayer, I don't think that salary is too far out of line, but maybe I'm off base. What do you think? Scroll down to leave a comment and let me know.
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