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GM CEO, Fritz Henderson, Takes 25% Treasury Mandated Pay Cut

Posted by zach On October - 23 - 2009

CEO Fritz Henderson’s annual salary is being cut by twenty-five Percent to $950,000 as part of the Obama administration’s mandated pay reductions for some of the top executives of companies that received government bailout money. It’s reported that the top 175 execs’ salaries of seven companies that were given help were all slashed. However, the US Treasury did not report the identities, only the salary numbers were listed. Evidently Henderson was identified by a source knowing the CEO as the highest paid GM executive, which only makes sense since he is the cheif executive officer.

The Treasury reported that, Including the cut, the overall compensation for Henderson will still be more than triple of what he made last year. It’s now $5.4 million. This is because he will get $4.2 million in stock salary and long-term restricted stock. This type of equity pay changes based on fluctuating share prices, which gives major performance incentives for the CEO. A better performing company and an upward movement in stock price could drastically affect his overall salary.

On the other hand GM had proposed $1.8 million for twenty-five top-paid employees. That is nearly double what Henderson was actually allowed by the Treasury. The Treasury Department’s Kenneth Feinberg, in charge of reworking compensation for the twenty-five highest-paid executives at the seven banks and automakers, stated their cash salaries for the remainder of ‘09 would be cut by more than 90 percent compared with 2008. At GM the top twenty-five’s cash compensation will decline by thirty-one percent, and at Chrysler a departing executives pay was completely cut off, contrary to how Chrysler would have it, all done by actions of the Treasury.

Feinberg’s powers only extend to those seven companies who have recieved bailouts, but he said Wall Street should take notes and apply the standards more broadly.

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