I can see both sides of the argument....leadership can get a company in trouble with bad business decisions, poor product planning, etc....and the sign of a real leader is one that is willing to make the biggest sacrifices for the good of the organization.

It's the "Captain of the Titanic" philosophy, and I understand completely.

But I can't exactly dig on the salary of these guys. Listen, being as high up as Wagoner and Lutz are in a company like GM brings an E X T R A O R D I N A R Y amount of stress and responsibility. In all seriousness, who here would want to take on the day to day responsibility of running a corporation like General Motors....or Ford....or any other global enterprise? These are well educated men and women who don't always make the right decision, we all know that, but are still far more qualified than anyone on this website. As such, they deserve the higher salaries they receive.

 

I think that both centric and ProudPony see my points and accept them as they seem to have thought of that even without posting them. I can also say that I underestimated their thought on the situation and they certainly are not saying that execs are the problem.

Good discussion going guys lets keep it going.

 

I would, and I am being serious. I've always been the type who wants to be in charge and wants to be the leader.
I currently work at a huge bureaucratic company and I see everyday the failure, waste and incompetence that passes for management.
At any of these companies management has never met and doesn't have a clue what 90% of the grunts below them do. At the top level they have about 20 executives who have 60 executives under them.
Even at the top you don't make all the decisions, you have people under you who run an entire branch of the company and the grunts in that branch will do their job whether the CEO is there that day or not.
Sure being the CEO is hard if you don't like making decisions, but if your like me and you love being in charge, feel confident in your abilities and decision making its hard work but its a lot of fun. So yes I'll take 5 million dollars plus my stock options to boss you around.

 

I think it's a great way to lead by example.

 

i totally agree, there are very few positions within the private sector of this country that have as much pull on the american economy or on as many people's standard of living as the CEO of a major company. its a huge burdon to know that decisions you make can sink or swim a company, either letting millions of people live their lives with job security or casting millions of employees / related workers into wellfare and unemployment.

i really don't think there are many people that can make a good CEO, hence their price is very high.

 

ok, I just had to chime in on this one.

First off, GM execs as well as the top level Execs of many big companies make too much.

Stressful? Stress is when you get laid off a week after closing on your new house that cleared out your savings and you have a newborn baby.

Stress is wondering whether you're family would do better with the insurance money from your own death instead of being broke and starving with you alive.

I understand their jobs are stressful, most jobs are.

20m dollars worth of stressful? not that much stress in the world partner. If you can't manage the stress of your job, you can't manage a company.

Salaries of top employees should be a direct link to how much the entry level 2nd year employee makes. Not the same mind you, but if the entry level guy who has his foot in is making say 40k a year, the CEO's pay should be pre-determined by a set amount over that, I would say 1/2 a mill is more than enough for anyone. So if they want to be a billionaire, they should invest in the company with their pay and make the company perform better.

The way it is now, if a CEO fails or succeeds, he/she makes millions upon millions of dollars. Period. So many do not care how it goes, and more remove themselves form it so they can make those life altering decisions that put you in the poorhouse, without thinking twice.

The CEO of Lucent Technologies made over 70m US dollars the year I was laid off. I was laid off in March of that year. By December the company was in even worse shape, and she made 20m in salary, and 50m in stocks.

I know I am sounding bitter, because I have a right to be.

She made stupid decisions, and was mostly withdrawn and let the company go. I along with thousands of others lost our jobs while she did nothing to fix it, and raked in millions.

I have read numerous books on economics, and have written business plans that have won awards.

Want to know what the major problem is? Big companies all use the same formula. Well paid execs, separated labor, misguided management.

If the top level execs at GM made from 150 to 500k a year, that is enough to live on, by any stretch. That alone would free up tens of millions.

However another problem is the way Unions protect useless workers. I was union and saw it. I saw a guy who came in to work 1-2 hours late every day, sat down at a desk and put his feet up, read a paper then slept the rest of the day. Sometimes he'd wake up at noon and leave. It took my boss 6 years to finally fire him. 6 years and by then he was probably making 60-70k, on top of benefits. Plus he was not the only one like that, and there are people like that in Every union. The Union should not protect people like that, in most cases they do though.

I also think there should be different classes of jobs;

1. General entry level hourly. Straight hourly, maximum 40 hours, minimum wage (which should be at least 6.50) or more. great for part timers, seasonal type employees, and a good place to start people where they could move up to other levels. 2 years max then must be offered level 2. Work out a way to make sure the company does not have 90% level 1 people and a few level 2s, 3s, etc, but it would have to be different for different industries. This is where high school grads can get experience and a company won't have to supply benefits (other than workman's comp, etc) and the company won't have huge overhead on a good amount of workers.

2. second level career type employment. Hourly minimum 40 hours pay, double minimum wage and up plus benefits. Or salary equated to the same level at 45 hours a week. (retirement savings starts here, not at level 1)

3. Management, slightly above the highest paid level 2.

4. Executive. At most 10 times the average income of the level 2 employees.

This will make the company want to move people up, and train them and hire new people. They will also want to pay them well, as they will need to pay them more in order to pay the executives more. So the execs can't cut the pay of employees and lay off employees while still making millions.

The levels 1 and 2 should be Union if they want. THe management could even be union, but a different union.



I am sure I'd have to work out the formula to make it better, more accurate and fair, but that is the jist of it.
Anyway, just a way to keep things realistic without going Communist. This way it keeps it fair to everyone on board. Even the people who start at level one get experience and if they work hard enough, they will progress to level 2, yet can be unionized so they can make sure they don't work 1 year and 11 months and get laid off. THat way, you are not taking away the high income of the top execs, just making them work for it more (based on the companies performance). Also, it would vary for companies with more emplyees, or less, to be more realistic.

With my example, GM would have a workforce of people that would not require benefits, or much overhead. Plus they would start out making about 6.50 an hour up to 13 an hour based on performance experience, etc.

Then there would be the level 2's Making from 13 an hour up to........ lets say 40 an hour. Averaging 30 an hour, or about 65k a year.

Then Managers, making about 90k a year.

Then execs, from 100k up to 650k.

I'd love to make 650k a year, I don't know about you guys. If ANYONE says 650k is not enough, they are greedy. That's enough to buy a huge house and several exotic cars. If that's not enough for you, you're a moron and need to make minimum wage or better yet nothing for a year.

Anyway, that is part of the plan I would put together to bail GM ou tof th emess it's in, along with many other things.....

 

yet if you read anything about them, you'll find the higher the price, the worse they perform on average.

There was a study on the best performing companies VS the worst performing large companies of the past 10 years. THe top ten best all had unknown "underpaid" by industry standard CEOs. The Worst ten all had high profile and or highly paid CEO's.

Kind of like when a Genius who didn't attend college gets passed over for a college grad who can hardly function in normal life, because he is a college grad.

 

I think that one fix to the problem is pay the execs a small base salary and base ~75% of their pay off their bonuses. If they are going to make the money they better earn it. Also, not allow them to cash out their stocks until a few years after they leave the company. This would insure that the company doesn't take a nose dive after they leave and commits them to make the company be productive long term.

 

Top executives really aren't that hard to find. I meet at least 4-6 people each year coming out of school that could run an organization much better than I can--after they've learned the little "real world" things like cash flow and not partying until the ink is on the paper.

And I'd contend that running a large organization is not that difficult, not with the army of statisticians, advisors, scriptwriters, lawyers, and policy wonks you're surrounded with.

I know people who run companies 100x the size of ours. They usually don't sweat their decisions that much.

Why? Because they're disconnected from reality. They operate in the stratosphere. How do you think they can justify paying themselves tens of millions of dollars when the company performance is in the toilet? Do they think that nobody will notice? Do they think it won't be demotivational to all the other employees? In a word, YES. They believe their own BS.

So why is it so hard to find a top exec? Because the board wants to hire the people they know. With a pedigree. Who allows them to cover their own asses if something goes wrong.

Hire a brilliant nobody, and God help you if he doesn't perform.

Hire someone who you went to Harvard with, who's buddies with the chairman, who's had the keys to several billion-dollar companies handed to him over the course of his career, and if he tanks, oh well. He has a track record. Couldn't have been helped. Nobody would have known. Boo-hoo. Give him his $30M severance and let him go.

Sad, pathetic, grab-what-you-can. Welcome to big business.

 

I commend the gesture; it gives the perception that they are committed to the company's interest as a whole. Does it really affect them- I'm not in their shoes so who knows. Are they still overpaid- you betcha!

It still goes a long way toward perception; same reason Ford did it.

GM is being crushed under the weight of their own infrastructure, plain and simple. It will not change until labor contracts (including benefit packages) and management salaries (again, including all benefits) are scrapped and they are re-written to make the system dependent on personal PERFORMANCE and responsibility vice entitlements. When there is incentive to perform (as opposed to the norm in our society today), you get performance.


Allen

 

And GM has the ability to surpass 40% of US market share.

If they could ever figure out how to use the entire GM portfolio to it's complete advantage, they'd make things a lot better in every way.

 

Actually, that's a huge help alone.

Bill Ford has forgone his salary till the company turns around. Sure, he still has stocks, expense accounts, allowences, etc. But it's a big help when it comes time to close plants, layoff workers, or renegotiate pay and benefits. It lends a bit of credibility and a sense of "we're in this together" feeling.

Lee Iacocca did the same thing when he took over Chrysler, forgoing his salary for stocks. He got concessions other makers could only dream of, and when he cashed in a few years later he could have personally bought a small country.

GM has some tough times, and those tough times were created mostly by management. Now we're looking at some mindnumbing layoffs, plant closings, and necessary cutting of benefits. It's going to be pretty hard to sell all this when executives are still making multi millions, regardless as to how the company fares.

 

The other General seems to be one of the few large companies in America who keeps creating very solid leaders.

 

You're correct, and the "Job Bank" is limited, it doesn't go on forever, it's only good for the duration of the contract. And many fall under a "Core" number of a plant's employees, and are NOT eligible.
Like said, when a cut DRASTICALLY affects your standard of living, it's a little DIFFERENT...
As I've said before, I'd take one year's salary of theirs, and RETIRE.

Centric...Proud...very good points, as usual...

 

So would I, man, so would I.

And then, I'd be free to take on the top executive post of a failing company at no pay--and reap the rewards if I turned it around!

But, of course, I live in the real world. It's quite a different thing when you're born to a life where you expect to go to Yale, when you expect to have the keys to a multi-billion dollar company handed to you, when you think you can't live without the $25,000-per-weekend parties and corporate jet and $20M mansion and $5M vacation home and $1.5M house in Costa Rica, because that's what all your friends do, and you couldn't be seen doing less than them, oh no, that really wouldn't do, so shocking, oh my god no.

The fantasy is that we live in an egalitarian society. The reality is that it's an old-boys-club. And the real catch-22 is that you can't legislate the old boys, because the old boys are the ones doing the legislating!

Can you start your own company and do really, really well? Yes. Is it as easy as being the son of one of the old boys? Not by a long, long, long shot.