Saturday, December 20, 2008

GM and Chrysler Get Billions; Execs Promise to Work for a Dollar

Well he did it. George Bush just soaked us for another $17.4 billion to give to his friends in the auto industry. This brings to a close one of the biggest blackmail cases in US history, where the compensation, 17 billion dollars, is the largest payoff in history, and the hostages, 3,000,000 workers, also the largest in history.

The ransom note said something like this: “We have your country. Pay up now or 3,000,000 will people lose their jobs and the economy will be laid waste.”

And so, unbelievably, rather than call their bluff and nationalize the industry that they themselves pointed out was a threat to national security, Bush ponied up.

But the loan, the White House says, comes with some strings attached. The corporate executives have to give up their corporate jets and take a reduction in pay. No problem said Ford and GM CEOs the last time they were in DC, we’ll work for a dollar a year.

Well Katy bar the door, as the saying goes. Here comes a fleecing.

When you look at how GM compensates its executives, here, their salary pales in comparison to all of the other compensation instruments available to the big boys.

I summarized it all below in a table of non-salary compensation. Click to enlarge.

That’s right, those 5 guys take $33 million a year in other-than-salary compensation. Their salaries are a mere 17% of that compensation. This means that they get all of that money to buy stock at lower than already low market prices, and the loan itself drives up the price of their stock.

But that’s OK, if the execs fail to deliver on a restructure plan, the Obama government, Bush promises, will call back the loan and effectively kill off two of the big three auto makers.

Bush knows how to cut a deal, doesn’t he?

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