General Motors chief executive Fritz Henderson is to have his pay effectively quadrupled under new federal guidelines for recipients of US bailout funds to US$5.45m but the cash portion will be cut, a person familiar with the plan has said.
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Henderson’s $1.26m cash salary will be cut 25% to $950,000, a source told Bloomberg News, but he also will get $4.24m of stock and restricted stock.
“Most people wouldn’t consider it a raise,” GM spokeswoman Julie Gibson told Bloomberg. “They brought the salary down some and increased the reliance on long-term stock.”
The report said rules are part of the Obama administration’s effort to curb cash pay and match compensation to performance at GM, Chrysler and five financial companies that received aid from the federal Troubled Asset Relief Programme, or TARP. Henderson led GM through a bankruptcy backed by $50bn from taxpayers.
Chrysler, which also had federal help to restructure in court, isn’t paying any compensation to CEO Sergio Marchionne, the Treasury has said. He is being paid by Fiat where he is also CEO.
Citing a March GM filing, Bloomberg said Henderson received a salary of $1.3m and total compensation of $7.2m when he was vice chairman and chief financial officer in 2007. In 2008, his compensation totalled $1.71m, reflecting the reduced value of some stock awards.
“They cut his cash salary,” Joseph Phillippi, president of AutoTrends Consulting, told Bloomberg News.
“Everything else depends on this company succeeding, and succeeding is going to be extremely difficult. The stock could be worth $10m or virtually nothing.”
The pay shift comes at the direction of Obama administration official Kenneth Feinberg who has said the reshaped compensation packages at the taxpayer-rescued companies should become a model for corporate America.
