General Motors Co. chief executive Fritz Henderson said Wednesday that government-imposed cuts to his own salary, and the pay of other executives at seven companies that received taxpayer money, were "fair" and "thoughtful."
Henderson was among executives who will see their base salaries slashed under a plan by Kenneth Feinberg, the Obama administration's "pay czar." Henderson, between meetings with lawmakers on Capitol Hill, said the changes were "tough, but the situation is tough."
Feinberg said last week he had ordered the seven companies to slash the base salaries of their top executives by an average of 90 percent and cut total compensation — cash, stock and perks — in half. GM and Chrysler are among the companies that received government funds.
Henderson's base salary was cut 30 percent to about $1.3 million earlier this year when GM accepted government loans. He received compensation valued at about $8.7 million in 2008, but much of it included stock and options now nearly worthless due to GM's bankruptcy filing.
Under Feinberg's plan, Henderson's compensation package is expected to be nearly $5.5 million, including a cash salary of $950,000. The bulk of his compensation will depend on the performance of GM's stock when it becomes a public company again.
"We're not public yet but we will be and if we do our job that stock is going to have real value," Henderson said. "We thought it was fair. We thought it was thoughtful."
Henderson said he had read the first-person account by former auto task force leader Steven Rattner in Fortune magazine. In the piece, Rattner was critical of GM's leadership prior to the bailout, citing "stunningly poor management" and a board of directors that was "utterly docile in the face of mounting evidence of a looming disaster."
"There was a lot of truth in it," Henderson told reporters. "You've got to take that to heart. You've got to internalize it and say, 'How do we change?' We went bankrupt. We've got to change."
Also Wednesday, a person briefed on GM's finances said the automaker will announce later this week that it will draw from its government funding to pay the cost of buying a chunk of troubled parts supplier Delphi Corp.
GM has agreed to pay several billion dollars to fund Delphi's emergence from bankruptcy protection by buying an equity stake in a new Delphi, purchasing Delphi's global steering business and several of its factories.
Details will be disclosed in a filing Thursday or Friday with the Securities and Exchange Commission, said the person, who asked not to be identified because the paperwork has not been filed.
GM has received $52 billion from the federal government. It will draw on the roughly $33 billion in government money allocated to run GM after it left bankruptcy protection in July.
Henderson told The Washington Post Wednesday that the company would not need further government aid.
The person said the money isn't being drawn to fund GM's day-to-day operations, but would not give details of how GM is paying its bills.
The automaker, which is 61 percent owned by the government, plans to release details of its finances in November.
Delphi, once GM's parts division, was spun off in 1999 as a separate company but was forced to file for Chapter 11 in October 2005. It still produces about 10 percent of the parts used in GM's global manufacturing, and its components go into nearly all of GM's North American production lines.
Delphi emerged from bankruptcy protection on Oct. 6 as a new company after completing a deal with its lenders and receiving a promise for billions in loans from GM. Delphi's survival ensures a steady stream of critical parts to GM.
As part of the deal, GM agreed to buy an equity stake in the new Delphi. It also agreed to take back some of Delphi's businesses, including its steering operations and parts manufacturing facilities.
GM also will contribute billions in aid to help finance the deal.