GM CEO's pay cut in half in 2005
GM CEO's pay cut in half in 2005
Value of Wagoner's compensation package dropped 46 percent as firm lost billions, watched credit rating plunge
DEE-ANN DURBIN AP Auto Writer /
DETROIT -- General Motors Corp. Chairman and Chief Executive Rick Wagoner's 2005 compensation was cut by almost half as the automaker lost billions of dollars and its credit rating was slashed to junk status, according to a proxy statement filed Friday with federal regulators.
Wagoner received a package worth nearly $5.5 million in 2005, 46 percent lower than the $10 million package he received in 2004.
Wagoner's salary remained at $2.2 million, unchanged since 2003. He received no bonus for the year, compared to a $2.5 million bonus in 2004. He was granted 400,000 stock options with a current value of $2.8 million. In 2004, his 400,000 stock options had a value of $5.1 million.
Wagoner also received $345,082 in personal benefits, including $198,520 for security and $95,856 for use of the company aircraft.
The company's four-member compensation committee said it considered several factors in determining Wagoner's compensation, including the company's $10.6 billion loss in 2005 and ongoing costs for restructuring at GM and Delphi Corp., GM's former parts division. Delphi is looking for financial assistance from GM as it reorganizes in bankruptcy court. Last fall, GM announced a plan to cut 30,000 U.S. hourly jobs and close 12 plants by 2008.
"We noted Mr. Wagoner's strong direction and steady leadership in systematically and aggressively implementing a plan to restore the corporation and North American operations to profitability and positive cash flow," the committee said in a proxy filing to the U.S. Securities and Exchange Commission.
Other GM executives also saw cuts in their 2005 compensation. Chief Financial Officer John Devine received a package valued at nearly $3.9 million, down from $6.4 million in 2004. Bob Lutz, vice chairman for global product development, received a package worth $3 million, down from $6.5 million the year before. Devine and Lutz also didn't receive bonuses.
In GM's annual report, also filed Friday with the SEC, Wagoner described 2005 as one of the most difficult years in the automaker's 98-year history.
"It was the year in which GM's two fundamental weaknesses in the U.S. market were fully exposed: our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue," Wagoner said.
Wagoner said GM's losses in 2005 were "unsustainable." He also said the recent discovery of accounting errors were "extremely disappointing and embarrassing" and promised GM will be more transparent in its financial reporting.
On March 1, Wagoner and other senior executives announced they would voluntarily reduce their salaries this year. Wagoner cut his salary by half, while Devine and Lutz cut theirs by 30 percent. GM's board of directors also reduced their compensation by 50 percent, and the company cut its dividend its annual dividend from $2 per share to $1.
GM's steps were similar to those taken at crosstown rival Ford Motor Co. Chairman and CEO Bill Ford received total compensation of $13.3 million in 2005, or 40 percent less than the previous year, after Ford's North American division lost more than $1 billion.
GM shares fell 32 cents to close at $22.88 on the New York Stock Exchange.
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