German publications report bonuses
October 2, 2007
At a time when Chrysler LLC is trying to win historic concessions from the UAW, news broke over the weekend in Germany that Chrysler President Tom LaSorda and former Chief Operating Officer Eric Ridenour were paid bonuses worth millions for their help with the sale of the Auburn Hills automaker earlier this year.
Erich Klemm, the top German labor representative on DaimlerChrysler AG's supervisory board, is quoted in a German newspaper calling the bonuses "unreasonably high." The exact amounts of the bonuses were unknown.he report of LaSorda's bonus comes on the heels of Chrysler hiring other high-powered executives with undisclosed compensation packages and only a year after Ford hired Alan Mulally as CEO with a $28-million package.
LaSorda is leading the automaker's negotiations with the UAW over a new labor contract, but it is unclear how it affects the talks, which like those at Ford Motor Co. slowed when the UAW picked General Motors Corp. as the lead negotiating partner on Sept 13.
"This could hardly help the talks at Chrysler. Autoworkers are deeply concerned about a dual standard. If you're asking for sacrifice, serving caviar before the meeting isn't the way to go," Harley Shaiken, a labor expert from the University of California-Berkeley, said. "What makes it problematic is that this is something talked about in plant cafeterias to start with."
The subject of executive compensation was on the lips of General Motors workers striking last week before GM and the UAW reached a tentative deal Wednesday.
Asked moments after his members took to the picket line last week if the UAW was asking executives to make sacrifices along with hourly workers, UAW President Ron Gettelfinger responded: "We've pointed that out to them on more than one occasion. But that has been in the past -- and continues to be -- an exercise in futility."
Executive compensation could become an issue at Ford. Mark Fields, Ford's president of the Americas, caused a stir among the rank and file when it was reported by a local TV station that he spent more than half a million dollars commuting home to Florida on a corporate jet last year. He now flies commercial.
Ford CEO Mulally, who was recruited from Boeing Co. in September 2006, was paid more than $28 million to help turn around the struggling auto company, which lost $12.6 billion last year.
While his annual salary was set at $2 million, the rest of the package included compensation for use of a corporate aircraft, housing and a $7.5-million hiring bonus and another $11 million to offset stock options and other compensation he forfeited when he left Boeing.
Soon after taking the role of CEO at Chrysler, Bob Nardelli indicated that Gettelfinger already had brought up his $210-million severance package for leaving his job at Home Depot.
It is unclear how much Nardelli is earning as the top executive; it is also unknown how much Nardelli's new hire, Jim Press, who shares the title president and vice chairman with LaSorda, earns.
Chrysler is the first privately owned major U.S. automaker in more than 50 years and its financial statements are not made public.
Last month, Business Week, citing sources close to Chrysler, reported that Press' compensation package is worth at least $50 million and could go much higher later. Presumably Chrysler had to spend big to land Press, who had been the highest-ranking non-Japanese executive at Toyota.
The magazine article said an estimated 5% of Chrysler's equity is set aside for the top 75 managers with the automaker.
A Chrysler spokesman declined comment regarding LaSorda's bonus and Press' compensation.
Han Tjan, a DaimlerChrysler AG spokesman, confirmed that LaSorda and Ridenour were given bonuses for their work during the Chrysler sales process but declined to say the amount. The sums should be included in the next annual report issued by Daimler AG, as the company likely will be renamed at its shareholder meeting on Thursday.
In its most recent annual report issued in February, DaimlerChrysler said LaSorda, then Chrysler's CEO, received nearly $5.2 million in total compensation, including a $1.1-million annual bonus and $2 million worth of phantom shares that had a scheduled payout in 2010 and that could change in value. It is unclear how the change in Chrysler's ownership would affect those shares.
The Wall Street Journal, quoting the publication Frankfurter Allgemeine Zeitung, said Klemm, chairman of DaimlerChrysler's Corporate Works Council and the top labor representative on the company's supervisory board, called the bonuses "unreasonably high."
Private-equity firm Cerberus Capital Management acquired majority ownership of Chrysler from DaimlerChrysler in August.
Michael Whitty, a labor relations professor at the University of Detroit Mercy, said he doesn't believe LaSorda's latest bonus will affect the UAW negotiations, even though such things are controversial.
"Executive compensation is a big sore spot with rank-and-file union members and leaders, and I think the general public feels we're back in a gilded age with ... greed ruling supreme," he said.