My New GM Car

[Red Arrow]

dismantle the unions.... that would fix everything since middle mgmt and the higher ups are blameless... dismantle the UAW and GM could bring back the Fiero... kewl... thank you Easter Bunny... er, uh... gaspar.  /sarcasm.

Dismantle all non-union employee positions.  The union is blameless.  Let the UAW run GM.  /sarcasm also

[Red Arrow]

How much more $$$ do Japanese CEOs and upper and middle mgmt make compared to their workers?   How does that compare to salaries at GM?

Let's add: How much do the UAW big wigs get in compensation compared to the compensation of their rank & file members?  (I'm serious, not just trying to be a wiseguy.  I really have no idea beyond expecting the big wigs to make more.)

[USRufnex]

figures may be a couple years old but... UAW prez Gettelfinger had an annual salary of $144,733... UAW Secretary treasurer, $133,891... union VPs, $129,659... union board members, $118,813... American CEOs average FOUR TIMES the pay of their Japanese counterparts... average American CEO makes 262 times the wages of the average worker... average assembly worker makes $28 per hour, rising per capita healthcare costs have been costly... union workers pay roughly 2 hours wages per month as union dues...

[Red Arrow]

After my post, I had some time and looked up UAW/Gettelfinger and found some similar numbers.  I admit I was surprised.  I expected around $1 million.  The same references indicated other unions had higher pay scales than the UAW for senior personnel but we aren't talking about them here.

Part of the equation still has to be that even if GM, Chrylser, and Ford big wigs got the same ratio as their Japanese counterparts, would the big 3 then be competitive in the market place?  How far down the salary/wage ladder do they have to go?

[nathanm]

Part of the equation still has to be that even if GM, Chrylser, and Ford big wigs got the same ratio as their Japanese counterparts, would the big 3 then be competitive in the market place?  How far down the salary/wage ladder do they have to go?

It wouldn't make a significant dent in GM's red ink. When you're billions in the hole, saving even a couple hundred million won't do much. That being said, I think it showcases the now, now, now aspect of nearly all American businesses who can't seem to look past next quarter. That mindset is what put GM and Chrysler in the place they are now.

I blame the day traders and the media that panders to them.

[cannon_fodder]

Rufnex:

I agree that executive compensation is out of hand.  But is it the province of the government to tell businesses what is and what is not a good investment?  When We the People own or bankroll the company, sure.  But in general let businesses make stupid decisions if they want to.

Hopefully investors, bankers, and private equity funds start asking questions about such things before investing.

Is Bill Gates worth $35,000,000 a year to Microsoft?  Definitely.  Steve Jobs to Apple?  Yep.  Fred Smith to FedEx?  For sure.  Maybe even Ford Jr. is worth millions to Ford Motor since they seem to be heading in the right direction.  But are any of the past 3 CEOs worth much at all to GM?  Apparently not.  I believe the answer is more often "No" to the question are executives worth it. 

But sometimes the answer is yes.  If an executive can force his will and turn GM into a profitable company, he's worth billions.  So I hope the government doesn't muddle too much with the system, I hope the system figures it out and corrects the situation more naturally (sure we can loan you $1bil for a new plant, but no executive can make more than $X as long as the loan is outstanding).

[Gaspar]

Rufnex:

I agree that executive compensation is out of hand.  But is it the province of the government to tell businesses what is and what is not a good investment?  When We the People own or bankroll the company, sure.  But in general let businesses make stupid decisions if they want to.

Hopefully investors, bankers, and private equity funds start asking questions about such things before investing.

Is Bill Gates worth $35,000,000 a year to Microsoft?  Definitely.  Steve Jobs to Apple?  Yep.  Fred Smith to FedEx?  For sure.  Maybe even Ford Jr. is worth millions to Ford Motor since they seem to be heading in the right direction.  But are any of the past 3 CEOs worth much at all to GM?  Apparently not.  I believe the answer is more often "No" to the question are executives worth it. 

But sometimes the answer is yes.  If an executive can force his will and turn GM into a profitable company, he's worth billions.  So I hope the government doesn't muddle too much with the system, I hope the system figures it out and corrects the situation more naturally (sure we can loan you $1bil for a new plant, but no executive can make more than $X as long as the loan is outstanding).

This will certainly be a good example.  President Obama and Congress are now behind the wheel of GM.  Within the next couple of years (or months) we will know how effective that is.

[we vs us]

Rufnex:

I agree that executive compensation is out of hand.  But is it the province of the government to tell businesses what is and what is not a good investment?  When We the People own or bankroll the company, sure.  But in general let businesses make stupid decisions if they want to.

Hopefully investors, bankers, and private equity funds start asking questions about such things before investing.

Is Bill Gates worth $35,000,000 a year to Microsoft?  Definitely.  Steve Jobs to Apple?  Yep.  Fred Smith to FedEx?  For sure.  Maybe even Ford Jr. is worth millions to Ford Motor since they seem to be heading in the right direction.  But are any of the past 3 CEOs worth much at all to GM?  Apparently not.  I believe the answer is more often "No" to the question are executives worth it. 

But sometimes the answer is yes.  If an executive can force his will and turn GM into a profitable company, he's worth billions.  So I hope the government doesn't muddle too much with the system, I hope the system figures it out and corrects the situation more naturally (sure we can loan you $1bil for a new plant, but no executive can make more than $X as long as the loan is outstanding).

By and large I agree that compensation shouldn't be capped.  But still, how do you limit some of these obscene income multiples?  I'm thinking about the 236 to 1, for instance.  The market itself obviously isn't putting any downward pressure on executive comp -- and I include all the traditional forces of supply, demand, board member accountability and shareholder vote in the "market" basket.  In what looks like too many cases, compensation has become completely uncoupled from performance.  And if that's true, do we just let accountability lapse entirely until market forces -- maybe -- bring common sense back into play?     

[Gaspar]

I think that the evidence proves that GM deserves to die.  It is however, a grave mistake for the government of a capitalist country to put a salary cap on any private individual or industry. 

The instant any legislation caps the salary of a private individual, we cease to be a Capitalist country.

Our government has an established minimum wage.  When the government establishes a maximum wage, we can no longer consider ourselves free-market capitalists.  We will have embraced Socialism completely.

The beauty of Capitalism is that companies, shareholders, and the individuals are allowed to achieve or fail miserably.  It functions with the same rewards and cruelties as natural selection.  In either process, we find that interference can only destroy.

When compensation overshadows production, companies fail.  If we put the mantel of success or failure on the government, through income regulation or redistribution, we put an end to capitalism and the innovation that it creates.

Why create a better mousetrap if there is no reward for your innovation.

What happens in the next few months with GM will determine the fate of this country.

[we vs us]

I think that the evidence proves that GM deserves to die.  It is however, a grave mistake for the government of a capitalist country to put a salary cap on any private individual or industry. 

The instant any legislation caps the salary of a private individual, we cease to be a Capitalist country.

Our government has an established minimum wage.  When the government establishes a maximum wage, we can no longer consider ourselves free-market capitalists.  We will have embraced Socialism completely.

The beauty of Capitalism is that companies, shareholders, and the individuals are allowed to achieve or fail miserably.  It functions with the same rewards and cruelties as natural selection.  In either process, we find that interference can only destroy.

When compensation overshadows production, companies fail.  If we put the mantel of success or failure on the government, through income regulation or redistribution, we put an end to capitalism and the innovation that it creates.

Why create a better mousetrap if there is no reward for your innovation.

What happens in the next few months with GM will determine the fate of this country.

That's a little breathless, don't you think? 

What's your solution here, Gassy?  It's obvious that CEO pay rates are distorted and don't function on a realistic plane (I'm talking about CEOs who are not Bill Gates, Steven Jobs, or Warren Buffet). Many of these people are being paid huge sums regardless of their success or failure.  That kicks a crucial leg out from under the whole free market structure, because the downside of risk has been entirely eliminated.  If they're getting paid ungodly sums either way, there's really no incentive at play one way or the other.  Why bother to build a better mousetrap if you're going to be compensated richly whatever happens?

[cannon_fodder]

Wevus:

I really think the market will adjust itself.  IN the 1990's stock options and all sorts of items that diluted shareholder value were given away freely.  That was corrected by shareholders revolts.

Currently cash compensation and bonuses are under fire.  I imagine the markets will take care of it.  If they don't, we must assume the owners of the companies are OK with the compensation.

If the owners are OK with the compensation and the Government isn't bailing them out, what right do we have to complain?  If start Tulsa Lawn Mower People Inc. and want to pay my foremen $1,000,000 and my workers $5.65 your only say is to do business with me or not.  You have no right to step in and tell me I have to take money away from my foremen and give it to the mower pushers.

If the foremen then run the company into the ground they are out of a fat job and I (the owner) am out of my investment.

This model is destroyed when markets are not allowed to kill off mismanaged companies.  There is no incentive for owners to monitor their investment.  Nor is there an incentive for workers to really put pressure on the issue (we will LOSE OUT JOBS if you don't manage this company better, so either you change it or I have to quit before the ship sinks).

Very frankly, companies are not managed to benefit the workers OR the managers.  They exist to benefit the owners.   The owners need to step up and handle this.  Start voting NO one executive compensation packages.

[Gaspar]

That's a little breathless, don't you think? 

That kicks a crucial leg out from under the whole free market structure, because the downside of risk has been entirely eliminated.  If they're getting paid ungodly sums either way, there's really no incentive at play one way or the other.  Why bother to build a better mousetrap if you're going to be compensated richly whatever happens?

That's ridiculous.  The risk is far greater.  If market energy at GM and Christler were allowed to run it's course, and workers, shareholders, and the public weren't relying on the US Government to provide a parachute, then the company would die (spawning the birth of perhaps a dozen new innovative brands).  Whatever was left of the companies would be lean and wise, and investors would have a pattern to use as a precedent to a new smarter corporate policy. 

You can't argue this point, because it HAS happened before, a hundreds of times, with a hundred companies.  Failure is sometimes necessary.

Harvesting the organs always beats keeping a brain dead patient on life support.  Sure, It's hard for the family, but it saves lives.


I understand that wealth makes you angry.  Many Americans share your emotion.  To see these CEO's pulling million dollar salaries is disgusting when so many of us are hurting.  To see them mismanage their companies and cause millions of people to lose their jobs hurts. 

Damn the methods!  Damn the shareholders!  Damn the processes!  . . . but don't be so angry that you damn the country in your march for retribution. 

Take away the shareholders' ability to vote on executive compensation?  Really?  Take away an investors choice?  Really?  Give that choice to government?  Really?

Who decides what the company builds?  Who interprets what the consumer wants?

Government?

Great!

[USRufnex]

Gas,

Andrew Mellon couldn't have said it better himself.   

[Gaspar]

Gas,

Andrew Mellon couldn't have said it better himself.   

Thank you.

[USRufnex]

Of course, even Andrew Mellon believed in progessive taxation and additional taxes on "unearned income".......

http://www.absoluteastronomy.com/topics/Andrew_W._Mellon

Mellon believed that the income tax should remain progressive, but with lower rates than those enacted during World War I. He thought that the top income earners would only willingly pay their taxes if rates were 25% or lower. Mellon proposed tax rate cuts, which Congress enacted in the Revenue Acts of 1921, 1924, and 1926. The top marginal tax rate was cut from 73% to 58% in 1922, 50% in 1923, 46% in 1924, 25% in 1925, and 24% in 1929. Rates in lower brackets were also cut substantially, relieving burdens on the middle-class, working-class, and poor households.

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Mellon also championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business.