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NINETY EIGHT REGENCY

Henderson to take 25% salary cut as part of Treasury action

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Henderson to take 25% salary cut as part of Treasury action

NEIL ROLAND

AUTOMOTIVE NEWS

OCTOBER 22, 2009 - 5:05 PM ET

UPDATED: 10/22/09 5:28 P.M. ET

WASHINGTON -- General Motors Co. CEO Fritz Henderson's annual salary is being cut by 25 percent to $950,000 as part of the Obama administration's pay reductions for the top 175 executives at seven companies that got federal bailouts.

The identities of the top earners at each company were not disclosed in a U.S. Treasury report today. Only the highest salaries were listed. Henderson was identified by a source with knowledge of the matter as the most highly paid GM executive.

The overall compensation of GM's top executive will more than triple to $5.4 million, according to the Treasury report. Henderson, who was chief operating officer last year, will get $4.2 million in stock salary and long-term restricted stock.

Before the pay changes, Henderson was to make $1.3 million in yearly salary.

Equity pay fluctuates

The value of those stock holdings can change based on fluctuating share prices, GM spokeswoman Julie Gibson said.

Gibson declined to give the value GM assigned to its stock to figure the equity-based portion of the executives' compensation. GM's stock was delisted from the New York Stock Exchange during its bankruptcy this summer. The company has said it wants to go public again in the second half of next year, if GM is healthy enough and market conditions permit.

Rick Wagoner, who was ousted by the Obama administration in March, got $5.5 million in 2008, including $2.1 million in salary, according to a corporate filing. He received $14.1 million in 2007.

Marchionne gets no Chrysler salary

Chrysler CEO Sergio Marchionne is to get no salary from Chrysler, but will be paid by Fiat S.p.A., which runs Chrysler and owns a 20 percent stake in the U.S. automaker.

GM had proposed cash salaries of up to $1.8 million for 25 top-paid employees, nearly double what Henderson was finally allowed, Treasury reported.

Treasury's special master for executive compensation, Kenneth Feinberg, rejected that proposal.

"These amounts cannot be supported by comparison to cash salaries provided to persons in similar positions or roles at similar entities," the report said.

Overall, GM's pay for its top 25 executives will decline by 31 percent for salaries and 20.4% in total compensation.

Departing executive gets cut off

One departing Chrysler executive who makes $2.6 million in salary had his pay halted by Treasury, the report said. Chrysler had proposed that the unnamed executive be paid until the day of his departure from the company, which is sometime before Dec 31.

Treasury rejected that proposal and blocked any salary payments to him after today.

"The payment of any additional cash after the date of this determination memorandum would be inconsistent with the public interest," the report said.

Feinberg, charged with reworking pay contracts for the 25 highest-paid employees at the seven banks and automakers, said their cash compensation rate for the remainder of 2009 would drop by more than 90 percent compared with 2008. Overall compensation rates would be cut in half, on average.

"I am extremely sensitive to the public outrage about this," Feinberg told reporters.

Besides GM and Chrysler, companies affected are American International Group Inc., Bank of America Corp., Citigroup Inc., GMAC and Chrysler Financial.

Feinberg's powers only extend to those companies, but he said Wall Street should take notes and apply the standards more broadly.

Reuters and Chrissie Thompson contributed to this report

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I am not saying Fritz is work a plug nickel, but this kind of stuff worries me. Then again I am sure he is worth 25 percent less. :deathwatch:

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I thought Obama wasn't in the business of running car companies? This scheme will bleed talent from firms that need it most.

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Well with the growing deficit are we going to be able to appoint some one to over see the pay on Capital Hill?

We can base their pay on how well they balance the budget.

Lets face it the only thing that has been run worse than GM has been the goverment for the last 20 years. There is enough blaime to go around to everyone.

By the way this pay deal is claimed by some as unconstitutional. I just saw a former Fed Judge state his case why it was.

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Like him or not, there is an air of unfairness about this, since Fritz wasn't at the helm when things fell apart.
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I think Fritz should get a very low base salary and then a bonus based on profitability.

This

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Like him or not, there is an air of unfairness about this, since Fritz wasn't at the helm when things fell apart.

He was at the company in another position...just as guilty as Rick. These dinosaurs are part of the problem anyway you look at it.

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I thought they were going to impose a $200,000 maximum salary on bailout companies. Fritz was lucky to get $950k. If any of these executives were great and worth a few million a year in salary, their companies wouldn't have gone bankrupt and had to run to the government. I would be in favor of the government limiting pay to $200k and taxing each company at 90% until the loan is repaid. Once they pay back the government, they can do whatever they want.

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Like him or not, there is an air of unfairness about this, since Fritz wasn't at the helm when things fell apart.

Doesn't matter. Forcing a salary cut gives him a direct incentive to get out from the government's thumb.

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This has nothing to do with the companies or their profitability; rather, the Obama Administration looking at it as a positive step in answering back to all the public outrage over state-funded companies still compensating its top executives with high-paying salaries.

Obama hails companies' paycuts

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I read Fritz's total compensation is INCREASING because of stock options. Going up almost a million dollars even from his salary decrease.

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Cry me a river. I like the idea of him being paid based on how good of a job he does (what a strange concept for executives these days).

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I think Fritz should get a very low base salary and then a bonus based on profitability.

Actually I completely agree, great idea. The more I think about they did take tax payer money so they answer to us, so maybe its not a bad thing. (I would only say that to compaines that have taken tax payer dollars, not private industry.)

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hyperv6 hit it square on :

Until politicians have 2 seconds of job accountability and their pay tied to job performance (plus they are mandated to go on whatever healthcare mess they pass)- they have no leg to stand on to impose this.

I mean c'mon; the country is in shambles and they TAKE THE MONTH OF AUGUST OFF !! WTF ?

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hyperv6 hit it square on :

Until politicians have 2 seconds of job accountability and their pay tied to job performance (plus they are mandated to go on whatever healthcare mess they pass)- they have no leg to stand on to impose this.

I mean c'mon; the country is in shambles and they TAKE THE MONTH OF AUGUST OFF !! WTF ?

With politicians, we can fire them every 2,4, or 6 years..... we just choose not to.

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hyperv6 hit it square on :

Until politicians have 2 seconds of job accountability and their pay tied to job performance (plus they are mandated to go on whatever healthcare mess they pass)- they have no leg to stand on to impose this.

I mean c'mon; the country is in shambles and they TAKE THE MONTH OF AUGUST OFF !! WTF ?

I'd take off July and August every year if I could and go some place cool...July and August are disgusting in AZ. 2-4 weeks vacation in a typical job sucks as far as taking off a block of time.

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With politicians, we can fire them every 2,4, or 6 years..... we just choose not to.

Not good enough anymore (if ever).

The culture is corrupt; even jacking a 25-yr vet out of office does nothing to change that. They need fiscal job performance reviews with compensation tied to it AND term limits. Especially term limits.

Amazingly, positions with the most power / opportunity for corruption vote on their own rules of conduct. How did this happen again ??

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Not good enough anymore (if ever).

The culture is corrupt; even jacking a 25-yr vet out of office does nothing to change that. They need fiscal job performance reviews with compensation tied to it AND term limits. Especially term limits.

Amazingly, positions with the most power / opportunity for corruption vote on their own rules of conduct. How did this happen again ??

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Not good enough anymore (if ever).

The culture is corrupt; even jacking a 25-yr vet out of office does nothing to change that. They need fiscal job performance reviews with compensation tied to it AND term limits. Especially term limits.

Amazingly, positions with the most power / opportunity for corruption vote on their own rules of conduct. How did this happen again ??

+1

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further more, outside of these execs, how far down the line with the pay cap be drawn?

getting paid for an honest day's work makes sense.

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Not good enough anymore (if ever).

The culture is corrupt; even jacking a 25-yr vet out of office does nothing to change that. They need fiscal job performance reviews with compensation tied to it AND term limits. Especially term limits.

Amazingly, positions with the most power / opportunity for corruption vote on their own rules of conduct. How did this happen again ??

Balthy, please run for some office, so I can vote for you.

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