Tuesday, May 01, 2007

Wagoner paid $10M despite GM losses

Saturday, April 28, 2007
Wagoner paid $10M despite GM losses
Sharon Terlep / The Detroit News

DETROIT -- General Motors Corp. CEO Rick Wagoner earned $10.2 million in 2006, a year in which the automaker continued to lose money and market share but managed to trim billions in losses.

In his seventh year leading GM, Wagoner received $1.28 million in salary, down from $2.2 million in 2005, the company said in a U.S. regulatory filing. Wagoner's salary for this year will increase to $1.65 million.

His other 2006 compensation included $6.67 million worth of stock options and awards and $769,566 in other compensation, according to a filing on Friday with U.S. regulators.

The 54-year-old CEO, who's spent three decades working for GM, made $5.5 million in 2005 and $10 million in 2004. However, GM noted that changes in accounting rules last year mean his 2006 compensation should not be compared with previous years. If Wagoner's compensation were calculated under the old rules, he would have made $4.8 million in 2006, GM said.

GM also said the majority of Wagoner's compensation was tied to future performance.

The decision to cut the base salaries of Wagoner and other top executives came last year after Jerry York, a top aide to billionaire investor Kirk Kerkorian who later joined the GM board of directors, publicly urged GM to cut its executive pay.

GM's Chief Financial Officer Fritz Henderson, 48, and Vice Chairman Bob Lutz also took pay cuts, bringing each of their base salaries to $1.32 million.

Overall, Lutz, 75, made $8.4 million last year, including his salary, $2.93 million in stock options and awards and $445,679 in other compensation. Henderson made $5.2 million in total compensation.

Wagoner's 2006 compensation was a little more than one-third of the $28.2 million Ford Motor Co.'s new president and CEO Alan Mulally earned during his first four months on the job.

Last year was a critical one for GM, which debuted a string of well-received new vehicles and cut $9 billion in costs, but continued to burn cash and cede market share to Japanese rivals.

For the first time in 76 years, GM this week lost its claim to being the world's largest automaker when Toyota Motor Co. surpassed GM in sales for the first quarter of 2007.

But Wagoner's relentless drive to cut costs has played well on Wall Street. GM's shares rose 58 percent last year, the most of any company in the Dow Jones Industrial Average.

Executive pay has emerged as a hot-button issue as Detroit's struggling automakers have looked to the United Auto Workers union for concessions in tough times.

A little more than a year ago, GM, in a show of shared sacrifice to UAW leaders, halved its dividend, capped health care benefits for salaried retirees and slashed the pay of Wagoner and other top executives and directors.

"He's got a tough job and he should be well compensated," said Brad Rubin, an analyst at investment firm BNP Paribas. "But the UAW is going to be very disappointed considering all the concessions and givebacks they're providing."

GM lost $2 billion in 2006, a more than $8 billion improvement compared to its restated $10.4 billion loss in 2005. The automaker is in the midst of a sweeping restructuring plan that includes slashing more than 34,000 jobs and closing 12 plants.

In a letter sent earlier this week to top executives, Wagoner acknowledged frustration with being passed by Toyota, but said the company's overall strategy is a good one.

"What's important is that we stay focused on implementing our business strategies around the globe," he said. "Because they are working."

Wagoner and other top GM executives have been restricted from buying or selling GM shares since April 2005 when the automaker abandoned a profit forecast for the year. GM hasn't given a financial forecast since.

The automaker is proposing the election of new board members Errol Davis and Kathryn Marinello.

Davis, 63, is chancellor of the Georgia state university system and a director of BP Plc, Union Pacific Corp. and PPG Industries Inc. Marinello, 50, has been CEO of Minneapolis-based Ceridian Corp., a provider of human-resources and payroll services, since October.

Bloomberg News contributed to this report. You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.


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