In News That Should Suprise No One, Former GM Execs Are Clueless
Jason Lancaster | Aug 08, 2013 | Comments 3
Imagine that you were a senior manager at the old GM. Now imagine how you might feel when the company eventually succumbs to bankruptcy, and hundreds of thousands of people lose their jobs. Would you feel like a failure? Would you perhaps feel a little responsibility for what went wrong? A little guilt about not trying harder, putting up more of a fight, etc?
After all, if a company’s senior management isn’t somewhat responsible for corporate failure, than who is?
Sure the economy was a factor. So was the UAW. But GM and Chrysler failed while Ford (which had the same basic set of problems) didn’t. GM management has to take some responsibility for what happened to GM…right?
Evidently, about 100 retired GM executives (most of whom were VP’s or higher) didn’t see things that way. Go figure.
We All Have To Make Sacrifices, But I Deserve What’s Mine
When GM filed bankruptcy, the following happened:
- Hundreds of thousands of people – most of whom were middle-class workers – lost their jobs, both at GM and at affiliated companies
- Billions of dollars in debts (everything from outstanding commercial loans to outstanding invoices from vendors) were settled for pennies on the dollar
- Employee pension obligations, which are generally held sacred in these types of proceedings, were cut
That last item brings us to GM’s former execs, many of whom saw dramatic cuts in benefits. Any GM exec with a pension over $100k a year lost two thirds of said pension. Former CEO Rick Wagoner – who somehow managed to “earn” a $20 million dollar a year pension for his incredibly awesome stewardship of GM – saw his pension drop to a measly $8.5 million after the GM bankruptcy was completed (according to this story in the Detroit News).
All told, these executive pension cuts reduced GM debts by about $221 million – no small sum. Yet it’s still a fraction of the $4.6 billion in pension cuts that GM had to make, most of which effected middle-class workers who never earned an executive’s salary. Execs lost more of their benefits as a percentage, but they still got enough money to live like a king in the dried husk of a city that we used to call Detroit.
Of course, it’s not that simple. A handful of former execs (about 100) felt that their pension sacrifice was too great. They believed they were entitled to their handsome pensions, and they sued GM for taking away their money.
Fortunately, this story has a happy ending. These execs didn’t get their pensions back. But the story illustrates just how royally screwed up things were at the old GM.
Filed Under: Auto News
Like the pot calling the kettle black. It just shows it’s all about them only. They have that syndrome “Me, Myself, & I” gets you every time. What about me? They have that too. Unless GM has that sinking feeling making the VP’s and above go down with the ship I have no clue why they asked these people to come back and help.
I often see Bob Lutz on CNBC. I have also read many of his articles and 2 of his books. It’s difficult to argue his positions as his experience in the industry is unparalleled having been in management at GM. BMW, Ford and Chrysler for many years. He knows his stuff for sure but, his view point is also biased.
I’m sure he would be just as positive about Toyota or Honda if he worked there for a while also.
Wish I could have worked for some company/union which would have allowed me to retire at 50 and keep getting paid for another 50 years since I plan to live to 100. While management of most of the companies for which I own stock are so over paid it’s a disgrace, the payroll and pension benefits for the rank and file are the big numbers.
Bankruptcy is the answer and it’s time to embrace the free market concept. For those who think they have boarded the gravy train,,,,,,,,, your pension is underfunded in a country with a shrinking GDP and no way to make the payouts after few more years. Good luck when you get notified that you monthly check will start shrinking. The pyramid is starting to crumble under the weight of what’s on top.
don’t even get me started on GM. Worked for GMAC for 6 long years NON-union and while the UNION workers got their big Xmas bonuses, we got squat. The pay grade for us non union was like around 9 bucks per hour vs. starting pay for sweeping the floors unionized at the plants was like 18 bucks. I went to detroit once at the GM headquarters in the 90’s heyday and can tell you without a doubt all in that building lived like kings and queens with catered meals daily and not just ham sandwiches, but steak, seafood, etc. with all the trimmings. Back then and a huge reason on GM’s demise was they had 10 chiefs in charge making 100’s of thousands per year DOING NOTHING for every 1 indian worker busting their keester off for piddly.
My opinion is the govt. should have left gm and dodge rot away since they would’ve survived but in a much more smaller role.