With exquisitely bad timing, GM Vice Chairman Bob Lutz informed the Detroit News last Friday that he and his top cohorts were being paid way under market. He vented these opinions as Treasury’s Ken Feinberg was about to review 2010 pay for GM executives. And of course today is Presidents’ Day and the banks are closed, giving the public more time to contemplate last week’s news of still more extravagant Goldman Sachs and JP Morgan bonuses. Good context, Bob.
The fact that the management of GM is being paid anything is incredible to me. They should be working for $1 a year. If they can turn the company around, reward them. But since they are necessarily working hat in hand for the government, how do they come off grumbling about compensation? I mean, if you’re in a homeless shelter, do you complain that the beds aren’t extra-firm?
The other point Lutz made is that low pay cramps GM’s ability to recruit talent against the better-paying competition. No kidding. These guys are lucky to have an office to work out of. Given the whole history of the bankruptcy, I’m reminded of my late mother’s remark: “You should have thought of that when you were in the water!”
Today we learn from the same venue that the bankruptcy fees for lawyers and consultants are predicted to reach $1.17 billion when the case is finally closed, making GM’s the most expensive bankruptcy ever, probably topping Enron’s. The creditors are going to get zilch.
What we should be hearing from Lutz & Co. is how GM is going to pull itself out of this mess and justify the government’s $50 billion investment. Instead, last week he offered that while GM will lose money on its hybrids, it will continue to build them—because it has to. CAFE standards will force carmakers to offset their guzzlers with hybrids, as Inside Line noted. But GM will raise prices on its other cars to compensate for the losses.
Why don’t you guys bend your efforts to making hybrids better and cheaper while selling the public on their obvious benefits? The loss-leader philosophy is one major thing that got the industry in trouble in the first place.
There is a sense in all this that we are watching a badly acted farce unfold. Don’t we have any better playwrights or performers than Bob Lutz?
I wonder if any of you want to take up the cause for Maximum Bob? Please leave us a comment.