Top GM, Ford executives agree on US$1-a-year salary

GM’s Rick Wagoner and Ford boss Alan Mulally both pledged Tuesday to work for US$1 a year in salary if their companies get taxpayer help.

Wagoner’s total compensation for 2007 was US$15.7 million and Mulally’s was almost US$22.8 million, according to Equilar Inc., an executive compensation research and data provider.

In terms of pay, that put them in the top quarter of CEOs in the Standard & Poor’s 500 index — while their companies were considerably farther down the ladder. GM ranked 190th in the S&P 500 in stock market value last year and Ford was No. 233.

The median compensation for S&P 500 CEOs was US$8.8 million in 2007, according to Equilar, which gets its data from regulatory filings.

Robert Nardelli, chief executive of Chrysler, is also looking at a big pay cut too: he also has said he would work for US$1 a year in return for federal aid. But how big a pay cut isn’t known; Chrysler is privately held and Nardelli’s pay isn’t made public.

Like many U.S. executives, Wagoner and Mulally receive the bulk of their compensation in stock grants and stock options. The value of those awards is directly tied to the price of their companies’ stock. GM’s stock, which rose 26 cents to US$4.85 Tuesday, has fallen 80.5 percent this year. Ford’s stock, which added 15 cents to US$2.70, is down 60 percent in the same period.

Wagoner’s 2007 compensation package included US$11.7 million in stock-based compensation, according to Equilar, none of which he has cashed in because of the stock decline. Likewise, Mulally received stock grants and options valued at US$12.3 million, but they are virtually worthless at Ford’s current stock price.

Of course, if the shares rebound, so will the value of the stock-based compensation. In Wagoner’s case, GM shares would need to rise above US$29.11 before he could profit from exercising his stock options. Ford’s stock needs to climb to US$7.55 for Mulally’s options to be “in the money.”

In 2007, Wagoner received US$3.4 million in salary and cash incentives and Mulally was paid US$9 million. In addition, Wagoner received almost US$700,000 and Mulally got US$1.4 million in “other compensation,” which includes services such as personal security and use of corporate jets.

The latter has been a sore point with Congress, and GM and Ford have said they are selling some or all of their company planes. Wagoner, Mulally and Nardelli have all said they’re driving to Washington to testify before Congress this week.

This is not the first time an auto exec has volunteered to work for a token salary. In 1979, then-Chrysler CEO Lee Iacocca helped win congressional approval of a US$1.5 billion loan guarantee by agreeing to a US$1-a-year paycheck.

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