April 9, 2012 at 3:00 PM ET
Pity poor Dan Akerson. He’s delivered the sort of financial turnaround seldom seen in the business world, taking once-bankrupt General Motors to multi-billion-dollar profitability. But that won’t be enough to earn him a pay hike this year, according to the U.S. Treasury Dept., which has the final say on compensation for the maker’s top 25 executives.
Don’t pity Akerson too much. He’ll still take home about $9 million this year, including $1.7 million in salary and another $7.3 million in various forms of stock compensation. But that’s significantly less than his crosstown counterparts. Ford Motor Co. CEO Alan Mulally got a $29.5 million pay package, the maker announced last week, on top of more than $57 million in long-term stock compensation.
The federal government began overseeing the salaries of GM executives in 2009 along with those at other companies who received bailout funds under the so-called TARP program. Most of those firms have since paid off their loans and are no longer subject to the review of a federal pay overseer. But GM — which is still 26.5% owned by the Treasury – is still covered, as are Ally Financial, the former GMAC, and giant AIAG.
The controls remain in place because they are “necessary to ensure that compensation … satisfies the public interest standard,” according to Patricia Geoghegan, office of the special master for TARP executive compensation.
GM’s top 23 executives earn, on average, about $1.2 million apiece in total compensation. While several top execs, such as Vice Chairman Tom Stephens, have recently left the company, 14 who remain will receive 0.5% pay hikes and 8.4% increases in overall compensation when stocks and other benefits are included.
But nine of the company’s top managers – who joined GM in 2011 – will receive, on average, 45.5% less than the executives they replaced.
The ongoing pay limits post problems for GM in an environment where it has to compete against other auto manufacturers – and company’s not in the automotive business – for talent, the Detroit maker complains.
“There are some people who haven’t worked in the auto industry their whole lives, people that want to try something different that pays,” Mark Reuss, GM’s president of North American operations, told reporters earlier this year.
Akerson did manage to take home more than Sergio Marchionne received from Chrysler – which also received a 2009 bailout but last year’s paid off its remaining government loans. For the second year, Marchionne chose to receive nothing for his work at Chrysler. However, he did get $22.2 million from Fiat, the Italian automaker that currently owns a 58.5% stake in the U.S. maker.