Wagoner's golden parachute

[Byteme]

Not as large as the departed leader of Exxon's was, but GM hasn't recorded record profits lately either.

Not a bad deal, "thanks for leading the company through it's decline and near collapse.  You need any help with those bags of money on your way out?"



DETROIT (AP) -- Former General Motors Corp. Chairman and CEO Rick Wagoner will retire Aug. 1 with a pension and benefit package the automaker valued at more than $10 million.

Wagoner, 56, who was ousted by the Obama administration on March 30, will get $1.64 million in benefits annually for each of the next five years, plus an annual pension of $74,030 for the rest of his life, according to company documents filed Tuesday with the U.S. Securities and Exchange Commission.

The former CEO, who spent 32 years with the company, can also choose to cash out his company-provided life insurance policy at $2.6 million, according to the filing.

The benefits are worth about half the $22.1 million value that the company placed on Wagoner's retirement package at the end of 2008. The severance package is also far smaller than those afforded to many other large-company CEOs in the past, before the market meltdown made compensation practices a touchstone for public and congressional outrage.

Lee Raymond, former chairman of energy giant ExxonMobil, received a nearly $400 million retirement package in 2006. Stan O'Neal, ousted from Merrill Lynch in 2007 after the investment bank reported a huge quarterly loss, walked away with $161.5 million in stock, options and retirement benefits. Walt Disney Co. directors awarded a $140 million severance package to Michael Ovitz at the end of his brief stint in the mid-1990s as president of the entertainment company.

Although many GM retirees whose benefits have been cut or investors who lost money may consider Wagoner's package excessive, it is not out of line in comparison to other executives' pay, said Aaron Boyd, a research manager with Equilar Inc., an information services firm that specializes in researching executive compensation.

"For a company making billions of dollars in revenue, an executive regularly making millions of dollars every year, I think a $10 million retirement package, considering the length of time that he's been with the company, I think it's certainly understandable," Boyd said.

Wagoner's package comes at a time when the company slashed benefits for most of its retirees, including eliminating vision and dental coverage. Health benefits for blue-collar retirees also are somewhat at risk because they soon will be paid by a union trust that is largely funded by stock in the new GM.

Wagoner was credited by industry analysts with restructuring GM more than any other CEO in its history, shedding thousands of jobs while globalizing and energizing its vehicle design, engineering and manufacturing.

But since he became president and CEO in 2000, the company's shares have tumbled in value. In 2000, GM shares topped $92, according to the Center for Research in Security Prices at the University of Chicago. Trading of the stock, which stayed with the old GM still in bankruptcy protection, was suspended as of Friday at $1.15 per share. The company has said repeatedly that it likely will have little or no value.

In the past four years, GM has racked up more than $80 billion in losses as the recession and high gas prices cut into its sales.

Wagoner's ouster came at the hands of former Obama administration autos task force leader Steven Rattner, as the administration rejected a GM restructuring plan and ordered deeper cuts.

Wagoner has remained on the GM payroll since his ouster, but he had been working for $1 per year since late last year. Company spokeswoman Renee Rashid-Merem said GM disclosed last year that it had annual pensions for top executives by two-thirds.

GM has received $50 billion in U.S. government loans. On Friday, the automaker emerged from a 40-day stay in Chapter 11 bankruptcy protection with its best assets moving to a new company called General Motors Co. The U.S. government owns more than 60 percent of the new company, with hopes of selling stock to get some of its investment back, perhaps as soon as next year.

Wagoner earned $14.9 million last year at GM, although $11.9 million of that was in the form of stock and options which are now worthless.

He also was entitled to $366,602 in unvested stock awards and $534,627 in deferred compensation as of Dec. 31, according to GM's 2008 annual report. At the time, Wagoner got to keep about 3 million stock options, which allow him to buy GM shares at prices ranging from about $20 to $76.

As a condition of GM's government loans, the automaker is not allowed to pay severance packages to departing executives. Government officials began to crack down on so-called "golden parachutes" after last fall's backlash over $24 million in exit packages for the ousted chief executives of mortgage finance companies Fannie Mae and Freddie Mac. The severance payments were never made. Former AIG chief Robert Willumstad opted out of his $22 million severance package after being deposed as part of the insurer's government bailout last September.

From the beginning of his career at GM through the end of 2008, Wagoner received compensation totaling about $63.3 million, with $38.7 million of that coming during his years as chief executive. The totals take into account Wagoner's base salary, cash bonus payouts, long-term incentive plan payouts, gains from stock option exercises, and other compensation.

[Tave]

"long-term incentives"


I guess their goals weren't very high, eh?

[JWC]

After thirty years of working at the same place, I'd expect one hell of a retirement package also...and let's face it, GM sold what the public wanted until the summer of 2008 when gas prices soared and credit went to hell.  This recession caught many by surprise who are supposed to know better, even the guy that was just elected to be President of the US.

[Submariner]

After thirty years of working at the same place, I'd expect one hell of a retirement package also...and let's face it, GM sold what the public wanted until the summer of 2008 when gas prices soared and credit went to hell.  This recession caught many by surprise who are supposed to know better, even the guy that was just elected to be President of the US.

GM also sold a large number of sub-par vehicles.

[r0tor]

actually, seeing how his getting booted was a political stunt and how he was actually in the middle of turning GM around at the time - i think he deserves even more

[S204STi]

After thirty years of working at the same place, I'd expect one hell of a retirement package also...and let's face it, GM sold what the public wanted until the summer of 2008 when gas prices soared and credit went to hell.  This recession caught many by surprise who are supposed to know better, even the guy that was just elected to be President of the US.

+1.

[ifcar]

After thirty years of working at the same place, I'd expect one hell of a retirement package also.

Exactly.

Golden parachute refers to a very different situation than a standard retirement package.

[GoCougs]

Wow, a lot smaller than I would have thought. Had he not been homegrown it probably would have been much larger.

What issue golden parachute (and signing bonus) detractors don't understand is that it's part and parcel of rational market value of such high caliber talent.

[Tave]

Wow, a lot smaller than I would have thought. Had he not been homegrown it probably would have been much larger.

What issue golden parachute (and signing bonus) detractors don't understand is that it's part and parcel of rational market value of such high caliber talent.

I think the term "golden parachute" is reserved for failed executives who used bailout money to fund their severence packages. Left to the "rational market," their companies would have gone bankrupt and they would have received........nothing.

[GoCougs]

I think the term "golden parachute" is reserved for failed executives who used bailout money to fund their severence packages. Left to the "rational market," their companies would have gone bankrupt and they would have received........nothing.

The term has existed for quite some time; long before TARP came into existence, and as provided in the OP, also for executives that have left successful institutions.

Contract law is an integral part of capitalism, and as such, compensation obligations would hold (near)top position in a bankruptcy proceeding.

[Tave]

The term has existed for quite some time; long before TARP came into existence,

I meant in context.

[hotrodalex]

Golden parachute usually refers to a executive who comes in and kinda screws the company, then retires. Wagoner was working on a come back after 30+ years of sub par products and bloated middle management wasting money.

[Byteme]

Golden parachute usually refers to a executive who comes in and kinda screws the company, then retires. Wagoner was working on a come back after 30+ years of sub par products and bloated middle management wasting money.

People have been working on GM's comback since the mid 70's.  No one's managed it yet, Wagoner included.  He was just the 4th or 5th verse of the same song.

[hotrodalex]

People have been working on GM's comback since the mid 70's.  No one's managed it yet, Wagoner included.  He was just the 4th or 5th verse of the same song.

But under Wagoner, GM actually produced a couple good cars that are comparable to the Japanese makes.

[NomisR]

GM also sold a large number of sub-par vehicles.

Look at the general crap that's out there right now that people buy other than cars.. Americans demand sub-par products at a cheap price.

[r0tor]

But under Wagoner, GM actually produced a couple good cars that are comparable to the Japanese makes.

very true and some of the cars under his watch won't be out for another couple years due to the development cycle...

[TBR]

Let it be noted that Wagoner probably had precious little to do with product.

Regardless, under his tenure he didn't really make GM worse (ie: Roger Smith) and this isn't a golden parachute anyway. Total value is less than his salary was at one point.

[MX793]

GM also sold a large number of sub-par vehicles.

Sold at relatively thin profit margins to boot (minus the cash cow SUVs).

[FlatBlackCaddy]

I"m sorry, but i can't believe that some of you buy into the whole "wagoner was turning things around, then he got the boot" bullshit.

He wasn't turning shit around, it was just another half ass attempt at pretending gm finally got the message. They do that about every 5 years, people buy into it and they have a few more years of horrible mismanagemnt before everyone catches on. There was no turnaround, there was not huge UAW concessions, there was no push for class leading product FROM COMPACT CARS to full size cars, there was no cohesive brand identity at cadillac, there was no end to dealer controlled product developement(rebadge city, everone gets a model). It's all just BS and you gobbled it up like paris hilton gobbles up designer clothes and diseased cock.

Wagoner was the most worthless piece of shit i've every had the displeasure of reading about in GM press releases. Granted I am young and i'm sure there were plenty of douchebags before him but I stand by that statement as undisputable fact.

"But all the problems were there, what could he do" keep gobbling bitches, let me throw this wrench in your fantasy machine. CARLOS MOTHERFU**IN GHOSN. Here's alittle story for all the kids.

Nissan: "we are at the edge of bankruptcy, we need someone to turn this ship around"
Carlos: "I'll do it"
Nissan : "how long will it take"
Carlos: "In 3 years i will return us to a profitable automaker"
Nissan: "Ok, it's up to you"

2 THAT"S RIGHT TWO(2) YEARS LATER

Carlos: "sorry, i was wrong. 2 years have passed and we are one of the most profitable automaker. Perception is up, sales are up, profits are through the roof"

Nissan: "we forgive you carlos"



If you're still reading here's alittle GM story.

Wagoner: "turnaround is in effect, we are going to push new exciting product that will send everyone back to the drawing boards"

2 years later

Wagoner: "it's still coming, next year we will really show them"

2 years later

Wagoner: "okay, that last car was just a practice one. The next generation will blow you away"

next generation

Wagoner: "ya well, it's better than the last generation but we didn't have the money and cafe screwed us and uaw costs are too high also the US consumer has a unfounded poor perception. Just wait though, next year oh yeah that will be the one, blow you away"

2 years later

Wagoner: "oops, we're bankrupt. Just when i was finally going to really try and seriously turn things around"

[2o6]

Nissan also is nowhere near as big nor did it have the same problems that GM did. (does)






In the grand scheme of things, 10 million isn't a lot........

[TBR]

FBC, I don't think you give Wagoner enough credit for the stress and difficulty of running a company the size of GM, even if you are just maintaining the status quo.

[sportyaccordy]

FBC, I don't think you give Wagoner enough credit for the stress and difficulty of running a company the size of GM, even if you are just maintaining the status quo.

If you (Wagoner) step up to the plate, expectations will be high.

I don't think the package is unreasonable. My only beef is that it's being by GOVERNMENT Motors (me). Like someone said, w/o the gov't stepping in he would have got jack shit.

[Byteme]

But under Wagoner, GM actually produced a couple good cars that are comparable to the Japanese makes.

In eight years I would certainly hope so.  GM's always produced a "couple of good cars comparable to the Japanese makes"  Trouble is those were the exceptions.  GM's sales went from about 4.9 million units in 2001 to about 2.9 million in 2008.

GM's always had talented engineers, product planners, and production managers and they've always managed to turn out a good product when the corporation let them.  They've also had their share of talented executives in the ranks below the CEO and VP level.  But Thomas Murphy, Roger Smith, Bob Stempel, John Smith, Rick Wagoner; none of the CEO's since 1974 were able to make a sizable dent in GM's most significant problems; it's governence model, corporate structure and corporate culture.  John Smith came the closest.  For the past 35 years GM has been it's own worst enemy.

Will thing s change now.  Last week I heard an interview with Bob Lutz, now back as an active GM exec.  His statement of GM's number 1 priority upon coming out of bankruptcy.  Convince the public that GM makes a product worth buying, one on par with the foreign competition. We are rolling out new models.  That's been GM's battle cry since the early 1970's.  Is that just another round of "GM's Back, we're stronger than ever" PR talk?   I was hoping to hear GM would focus on product improvement and actually designing cars that would be better than the competition that people want and can afford, instead of focusing on marketing efforts.

And yes, running a large forporation like GM is stressful.  He was compensated for that while in the position.  Compensated well, despite losing market share, losing money and sales reduced by 40% during his tenure.  "We are a lot worse off than wehn you got here.  Here take some money and beat it".

[hotrodalex]

I"m sorry, but i can't believe that some of you buy into the whole "wagoner was turning things around, then he got the boot" bullshit.

I'm not saying he was awesome and couldn't have done better. He could have done a LOT more. But he certainly didn't do bad, especially considering all the crap that has been building up at GM the 20+ years prior to him taking over.

In eight years I would certainly hope so.  GM's always produced a "couple of good cars comparable to the Japanese makes"  Trouble is those were the exceptions.  GM's sales went from about 4.9 million units in 2001 to about 2.9 million in 2008.

I think you can compare GM to a lazy sports star. They can do great things when they feel like it, but it seems that they would rather sleep half the time.

[TBR]

If you (Wagoner) step up to the plate, expectations will be high.

I don't think the package is unreasonable. My only beef is that it's being by GOVERNMENT Motors (me). Like someone said, w/o the gov't stepping in he would have got jack shit.

I wouldn't count on it, he does have a contract which I would think would make him one of the first in line.

[dazzleman]

Not as large as the departed leader of Exxon's was, but GM hasn't recorded record profits lately either.

Not a bad deal, "thanks for leading the company through it's decline and near collapse.  You need any help with those bags of money on your way out?"



DETROIT (AP) -- Former General Motors Corp. Chairman and CEO Rick Wagoner will retire Aug. 1 with a pension and benefit package the automaker valued at more than $10 million.

Wagoner, 56, who was ousted by the Obama administration on March 30, will get $1.64 million in benefits annually for each of the next five years, plus an annual pension of $74,030 for the rest of his life, according to company documents filed Tuesday with the U.S. Securities and Exchange Commission.

The former CEO, who spent 32 years with the company, can also choose to cash out his company-provided life insurance policy at $2.6 million, according to the filing.

The benefits are worth about half the $22.1 million value that the company placed on Wagoner's retirement package at the end of 2008. The severance package is also far smaller than those afforded to many other large-company CEOs in the past, before the market meltdown made compensation practices a touchstone for public and congressional outrage.

Lee Raymond, former chairman of energy giant ExxonMobil, received a nearly $400 million retirement package in 2006. Stan O'Neal, ousted from Merrill Lynch in 2007 after the investment bank reported a huge quarterly loss, walked away with $161.5 million in stock, options and retirement benefits. Walt Disney Co. directors awarded a $140 million severance package to Michael Ovitz at the end of his brief stint in the mid-1990s as president of the entertainment company.

Although many GM retirees whose benefits have been cut or investors who lost money may consider Wagoner's package excessive, it is not out of line in comparison to other executives' pay, said Aaron Boyd, a research manager with Equilar Inc., an information services firm that specializes in researching executive compensation.

"For a company making billions of dollars in revenue, an executive regularly making millions of dollars every year, I think a $10 million retirement package, considering the length of time that he's been with the company, I think it's certainly understandable," Boyd said.

Wagoner's package comes at a time when the company slashed benefits for most of its retirees, including eliminating vision and dental coverage. Health benefits for blue-collar retirees also are somewhat at risk because they soon will be paid by a union trust that is largely funded by stock in the new GM.

Wagoner was credited by industry analysts with restructuring GM more than any other CEO in its history, shedding thousands of jobs while globalizing and energizing its vehicle design, engineering and manufacturing.

But since he became president and CEO in 2000, the company's shares have tumbled in value. In 2000, GM shares topped $92, according to the Center for Research in Security Prices at the University of Chicago. Trading of the stock, which stayed with the old GM still in bankruptcy protection, was suspended as of Friday at $1.15 per share. The company has said repeatedly that it likely will have little or no value.

In the past four years, GM has racked up more than $80 billion in losses as the recession and high gas prices cut into its sales.

Wagoner's ouster came at the hands of former Obama administration autos task force leader Steven Rattner, as the administration rejected a GM restructuring plan and ordered deeper cuts.

Wagoner has remained on the GM payroll since his ouster, but he had been working for $1 per year since late last year. Company spokeswoman Renee Rashid-Merem said GM disclosed last year that it had annual pensions for top executives by two-thirds.

GM has received $50 billion in U.S. government loans. On Friday, the automaker emerged from a 40-day stay in Chapter 11 bankruptcy protection with its best assets moving to a new company called General Motors Co. The U.S. government owns more than 60 percent of the new company, with hopes of selling stock to get some of its investment back, perhaps as soon as next year.

Wagoner earned $14.9 million last year at GM, although $11.9 million of that was in the form of stock and options which are now worthless.

He also was entitled to $366,602 in unvested stock awards and $534,627 in deferred compensation as of Dec. 31, according to GM's 2008 annual report. At the time, Wagoner got to keep about 3 million stock options, which allow him to buy GM shares at prices ranging from about $20 to $76.

As a condition of GM's government loans, the automaker is not allowed to pay severance packages to departing executives. Government officials began to crack down on so-called "golden parachutes" after last fall's backlash over $24 million in exit packages for the ousted chief executives of mortgage finance companies Fannie Mae and Freddie Mac. The severance payments were never made. Former AIG chief Robert Willumstad opted out of his $22 million severance package after being deposed as part of the insurer's government bailout last September.

From the beginning of his career at GM through the end of 2008, Wagoner received compensation totaling about $63.3 million, with $38.7 million of that coming during his years as chief executive. The totals take into account Wagoner's base salary, cash bonus payouts, long-term incentive plan payouts, gains from stock option exercises, and other compensation.

This points out how, in corporate America, there is a glass floor as well as a glass ceiling (though I think the glass floor theory has more credibility).  I understand the need to reward good performance, but I really wonder if our apparent inability to get the right incentives attached to executive performance is leading us into economic oblivion.  I'd certainly say it's one of the factors.  Sort of like a great baseball player who signs a 10-year contract for $200 million, or something like that.  It must be paid no matter what.  And he's 35 years old.  What incentive does he have not to simply do the bare minimum and coast it out?  He comes out a winner no matter what.

I wish I could find the secret to geting into that position before I'm 75 years old.

[ifcar]

"What incentive does he have not to simply do the bare minimum and coast it out?"

Endorsements.

[dazzleman]

"What incentive does he have not to simply do the bare minimum and coast it out?"

Endorsements.

True.  But even those don't dry up until a player's been performing poorly for a while.  And by that time, he has so much money that it doesn't really matter.

[MX793]

True.  But even those don't dry up until a player's been performing poorly for a while.  And by that time, he has so much money that it doesn't really matter.

Yup, a former great can still bank on his legend to get endorsements.  I mean, how long has Michael Jordan been retired and I still see him in ads and I'm sure he's still collecting some endorsement money.

[Byteme]

I wish I could find the secret to geting into that position before I'm 75 years old.

If you do send an e-mail with detailed directions.