I just read this article which talks about how the executives at Ford are willing to cut their salaries to $1 if they receive money from the federal government. Wow, that’s nice of them.
Notably absent in that entire article is a mention of executive bonuses. Bonuses and dividends are typically taxed as investments instead of income, and usually result in a smaller tax burden. In Canada, the tax rate on dividends is roughly half of what it is in regular income, so that’s the preferred method of making money.
So if they reduce their salaries to $1, I gotta ask, what are they planning to do with their bonuses? Unless it’s explicity stated what they will be, I really doubt the sincerity of this gesture, and would fully expect those executives to make up the difference with their normal bonus plans.
Updated at 4:15pm on Dec 2, 2008 – See, I told you so. Here is a list of the executive packages from last year:
Mulally had a base salary of $2 million and total compensation of $21.7 million last year, according to the company’s filings. Wagoner received base pay of $1.6 million and total compensation of $14.4 million. Closely-held Chrysler does not disclose executive pay.
So by changing their salaries to $1, they are in essence only giving themselves about a 10% reduction in compensation. Wow, some sacrifice guys.
Isn’t that what Steve Jobs’ salary is too? 🙂
Steve Jobs isn’t asking for money from the government.
You really gotta question what type of people can continue to give themselves 15 – 20 million dollar bonuses in the midst of layoffs and non-profitability.
I think there’d need to be a “no golden parachute” clause like the American government was demanding from the banks that wanted to be bailed out.
And even if they agreed to reduce total compensation to $1, they still are laughing because a bailout increases the value of the millions of shares each of them got as compensation in past years.
It’s a tough call; there’s many jobs at stake, including those who indirectly survive off the industry (waiters, store clerks, etc. working in the areas of the factories). But on the other hand, if you bail them out, are they suddenly going to start making cars with the quality and reliability of the competition (the competition that isn’t asking for a bailout)? Or are you wasting your money on some doomed companies? When times were really good the past few years, the American car companies were still having to constantly offer employee pricing to try to get people to buy their cars, who’s going to buy them in tough times?