Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand

[LinuxRandal]

Jack, what I am trying to say, is while some demand increased, the other never went away. Yet they ignored it, and tried to drive demand FURTHER, toward the big vehicles.

Kinda like a kid wondering what a cigarette is like, and you make him smoke a pack. Then when he doesn't want another, you bring in a carton, make him smoke two, and progressivly make him smoke more.

[ironhat]

[quote=jackellis;378485]My opinion, of course, but depending on someone else to make sure you have a comfortable retirement is probably not wise. It was obvious to me 30 years ago when I first entered the work force and it has become even move obvious over time. Social Security and company-sponsored retirement plans should supplement other savings, not be a substitute for them.

Agreed, Jack. Unfortunately for the auto workers, they were sold the bill that the UAW was going to see that they were "taken care of" and those are the plans that the workers made. It would be a pity to see someone in their 70's have a large portion of their pension and health care yanked out from under them.

If the resignation of the top execs comes to pass I wonder what their goldern parachute will be. All **** will break loose if they get millions instead of the contents of their desk drawers and a boot on the butt on their way out the door!

[jackellis]

Yet they ignored it, and tried to drive demand FURTHER, toward the big vehicles.

Understand. I agree.

I have to confess that we just bought a pickup truck - right around the time of peak fuel prices. It has...4 cylinders, and I probably would have sprung for a diesel if the Tacoma came with one. That's our idea of a gas-guzzler

[herb fellows]

Flying there in private jets was dumb.

Not bailing them out would be dumber.

Bailing them out on the automaker's terms would be dumbest.

My proposal: Put them on life support: (1) A cash drip from the government equal to their monthly burn rate. Absolutely no lump sum payouts. (2) All three CEO's now report to a new auto czar (Warren Buffet, Jack Welch, others come to mind, someone accustomed to dealing with executive B.S.) (3) New auto czar will have the power to replace/remove any management if progress isn't made. (4) The unions come back to the bargaining table, and we renegotiate legacy costs into a taper so that the youngest employees take the largest hit, the older employees and current retirees take the least hit. Current features like pay for no work would be dropped or substantially modified.

These $25+ billion bailouts don't work any better than giving a crack-addicted homeless person $5000 along with a book on budgeting.

I like the cut of your jib! That's a better plan than any I've seen floating about. Maybe you need a government job, or at least maybe the government needs you.

[herb fellows]

Well, we can whine and moan about the big 3 executives, but have you checked out the pay of Honda and Toyota execs? Or how they travel?

As long as they're making a profit, that's between their shareholders and them. They make a profit because, on average, they make a better car. It's not like the Chinese imports that are made with cheap labor; most of these cars are made right here, by well paid, if not unionized, workers.
The Japanese companies have been able to keep the unions at bay by offering comparable, and in some cases better, packages to their employees. The big three have seen their market share decline for 30years, and have been unwilling, or unable, to stop it. In a free market, they would get exactly what they deserve. Belly up. Unfortunately, that will affect too many people, so I think we have to bail them out, but the strings attached to that bailout should be ironclad contracts. Perform or else.

[herb fellows]

As stupid and disrespectful the way the top execs get paid and spend money, the amount of money relative to what's churning each year is minor. What is demonstrated is how they live in a different world and have little or no need to resolve long term issues and problems. Hiring the exec from H.D. is stupid.

It is/was the short term greed of stockholders, executives, AND the UAW that is killing the Big Three. Giving them bailout money isn't going to force any of them to face reality and do what's right for the long term, not what's right for just their immediate benifit. I have no idea how to resolve their issues, but just giving them money is certainly not what's going to help.

How do you resolve the issue of UAW benifits that they were promised? How were they to be funded? What happened to the money set aside? If they were to be funded on future revenues, what guarentees were there if Ford or GM were to go out of business?

How do you reslove the issue of stockholders that expect and need a return on their investments? Many of us have money in 401k's, mutual funds, etc., and expect it to fund our retirement.

How do you resolve the issue of execs who are responsible for a company churning 150 Billion dollars in business a year? How do you set up realistic goals or incentives that satisfy stock holders, UAW, and long term goals of the economy?

Imagine how an exec can realistically balance a decision on how many billions to invest in electric cars 5 years ago when they're makeing huge profits on SUV's that is funding UAW benefits and dividends to teachers with GM stock? It's easy to decide now it was worth it, but 5 years ago, nobody really thought gas would spike for a few months. ****, gas is now less than $2 a gallon. Is it really reasonable to be investing billions in small eco-cars and expect people to be buying them two years from now?

What is reasonable is learning from history. Fuel efficient cars should be government mandated as a condition of any bailout. It's not a question of will gas prices go up again, only a question of when. I really am a proponent of government staying out of our lives as much as is practical, especially when you see the results of such wonderful government projects as deregulating the airlines. But if they are goinig to lend these companies MY money, I want the best shot at getting it back some day!

[herb fellows]

On the topic of exec. compensation, here is an interesting chart from the AFL-CIO site (please take note of the obvious bias). IMHO, worker to executive pay ratio is the key metric we should be concerned about. If executive compensation is organized such that working stiffs get stiffed, we'll all go to heck in a handbasket.



Also, while not defending all the negotiated terms of UAW contracts, the frequently-mentioned retirement and medical benefits require further explanation, IMHO. It is presumed those benefits are a key reason American mfrs. are uncompetitive, which may be true. OTOH, foreign workers get retirment and health benefits provided by the state.

If UAW workers give up these benefits, how will they get the care they need when they are old or sick?

JR

Japan is not paying health benefits for workers in America, where most of these cars are being produced now. Toyota, Nissan etc. have health plans just the same as GM does. The bottom line is what the American buyer wants: a reliable car. For the most part, the big three seem unable or unwilling to produce that.

[herb fellows]

Sorry for all the posts, this just drives me crazy!

[ragswl4]

I hope we don't give em a dime. Let em go to bankruptcy and better companies will emerge and hire the employees of the previous companies and pay them a reasonable wage and maybe they will get their act together. If we bail them out, more of the same. All these autoworkers will not loose their jobs, they will just be working for a different management. The current management has to go either way.

[cgallery]

A lack of a bailout is a little like delaying a roof replacement. In the long run, you pay for the roof, replacement sheathing, and maybe some drywall, too.

In the case of the big three, we either help now, or watch as one-by-one they declare bankruptcy and walk away from the pensions.

But wait, the pensions are guaranteed by (wait for it, wait for it) taxpayers. So the big three walk away from the pensions, and the taxpayer gets to pick up much of the tab.

I would prefer a loan that gets repaid, and helping the auto companies restructure their deals with the UAW.

A certain part of me thinks lawmakers have already blessed a deal (in smokey back rooms) whereby the auto makers declare bankruptcy on by one, and the U.S. picks up the balance of the pensions.

[3thumbs]

Somewhere these bailouts have got to stop. Yes, it will hurt a lot of people, but it will ruin ALL of us if we continue. Now the USPS is stepping up to ask to be bailed out!

[Stytooner]

Look guys. I drive a Chevy truck and the LOML drives a Chrysler. I ain't going to help Ford if I have anything to say about it. I also thought that since I bought these vehicles, that I would be helping out the companies as well. Apparently I just helped to pay those over inflated salaries and not the heath insurance of a couple of line workers.

The way I sees it is like this. It is all well and good for CEO's and the like to make as much money as they can. However, the catch is that they have to do a good or at least a decent job of managing and decision making. Since all three are ready to fall flat, one thing is glaringly apparent to me. Someone or many someone's at the top of the hierarchy of these corps have not been doing a decent job. Since they are receiving money and not fulfilling their end of the contracts, they are effectively stealing the money or at least receiving something for nothing. Is it a job requirement for CEO's that they not have a conscience? How do they sleep at night? Luxuriously from the way it appears.

[LCHIEN]

Look guys. I drive a Chevy truck and the LOML drives a Chrysler. I ain't going to help Ford if I have anything to say about it. I also thought that since I bought these vehicles, that I would be helping out the companies as well. Apparently I just helped to pay those over inflated salaries and not the heath insurance of a couple of line workers.

The way I sees it is like this. It is all well and good for CEO's and the like to make as much money as they can. However, the catch is that they have to do a good or at least a decent job of managing and decision making. Since all three are ready to fall flat, one thing is glaringly apparent to me. Someone or many someone's at the top of the hierarchy of these corps have not been doing a decent job. Since they are receiving money and not fulfilling their end of the contracts, they are effectively stealing the money or at least receiving something for nothing. Is it a job requirement for CEO's that they not have a conscience? How do they sleep at night? Luxuriously from the way it appears.

Hypothetical question - I'm not taking sides here.
But if a company is losing say $2 Billion per quarter and the CEO implements measures that stem the loss to only $1.75 B per quarter, saving $1 B per year, has he not earned a salary of $100M, a net savings to the company of $900M?

Conversely, who's spending money more foolishly, the GM CEO taking a corporate jet to Washington DC for $20,000 or a underemployed union auto worker who is taking $50,000 a year in pay/benefits and doing crossword puzzles at the local union offices while on GM's payroll.

[Stytooner]

I think not. If he gets the loss down to black over a period of 5 years, then he has earned 100 M. Otherwise his extravagance is still costing the company money they don't have yet. He's part of the problem until he actually becomes part of the solution.

[jackellis]

Well here's another not-so-hypothetical question. Lou Gerstner took over IBM when it was in pretty bad shape (caveat - LOML worked there for 30 years). He was paid a nice salary but most of his compensation was in stock. When he left at age 60, he had increased the market value of IBM by a couple hundred billion dollars, which means the stockholders were that much richer. Was that worth the half billion dollars or so he was paid over the years in salary and stock?

This compensation business is pretty tough. Here's another example. A fellow helps found and fund a small startup company to the tune of, say $200k. The company struggles for 15 years before finally going public for $1 billion but this founder and funder has been gone for 7 or 8 years and only owns some stock. What's he "entitled" to?