Can you believe they paid me this much to LEAVE Home Depot? And now, outgoing Chairman Bob Nardelli is earning just $1 a year.
Help Wanted: Brilliant, visionary, experienced leader willing to put in countless 24/7 days resuscitating bankrupt manufacturer. Must be thick-skinned, cool under constant fire and already financially independent. Willingness to work for $1 a year a definite plus. Please call Tim Geithner at the U.S. Treasury Dept. for more details.
While you might not see that ad in your local classifieds, it pretty much fits the basic guidelines of what Chrysler will likely be looking for, if and when it emerges from Chapter 11 reorganization.
The automaker’s current CEO is already working for that miniscule amount, Bob Nardelli volunteering to take a mega-million-dollar cut, late last year, when the automaker went to Washington searching for a federal bailout. Before you begin feeling sorry for Nardelli – who says he’ll stay with the automaker until it’s wrapped up the bankruptcy process – recall that his parting gift when leaving his job as chairman of Home Depot, a few years back, was a fluffy golden parachute worth $210 million.
Who’ll take over from Nardelli is anything but certain. One of his two top lieutenants, Vice Chairman Tom LaSorda, also plans to leave Chrysler. The other, Vice Chairman Jim Press, the former Toyota executive, hasn’t yet made his plans clear. But there’s a very good chance we could see a wholesale housecleaning once Fiat were to gain a controlling interest in the floundering U.S. maker.
Might the Italian carmaker’s hard-charging CEO, Sergio Marchionne, take on dual duties? That’s possible, and something we’ve seen before. Carlos Ghosn, the Chairman of Nissan, since 1999, added the title of CEO of alliance partner Renault, a few years back. But considering Chrysler’s incredible array of problems, it would be hard to imagine how Marchionne could steer it to safer waters while also piloting Fiat as it sets an aggressive course for global growth.
In decades past, one would almost expect to see someone from within the auto industry come onboard, most likely from one of Chrysler’s domestic rivals. The legendary Lee Iaccocca, for example, started out at Ford, while his successor, Bob Eaton, was a lifelong General Motors employee before heading north to Auburn Hills, Michigan.
More recently, we’ve seen a trend towards recruiting outside talent; there’s Press, from Toyota, of course, and Nardelli, who came from outside automotive circles entirely. That’s a strategy with mixed results. We saw GM hire an assortment of top executives recruited from cookie makers, pencil manufacturers, even the contact lens manufacturer, Bausch & Lomb – where its one-time president, Ron Zarrella, eventually returned to after seven lackluster years.
On the other hand, Ford Motor Co. has received widespread praise for the acumen of the CEO it lured in from the airline maker Boeing, three years ago, Alan Mulally. His decidedly risky decision to mortgage Ford operations to develop massive lines of credit allowed the second-largest U.S. maker avoid the federal bailout route, while his emphasis on product seems to be positioning Ford well for stabilizing its sales and market share once the recession eases.
Whoever Chrysler goes after, the company may have a hard sell, however. Inflamed by the massive wages and bonuses paid to bank and financial services industry executives – some after they had already received their own bailouts, Treasury Secretary Geithner enacted rules that would sharply limit the compensation of top executives working for companies receiving what is euphemistically described as “extraordinary assistance.”
Since the Bush White House squeezed the auto bailouts into the same $700 billion program originally set up for those banks and brokerages, Chrysler would appear to face the same caps: a maximum $500,000 annual salary and some restricted shares of stock.
Indeed, Nardelli’s successor wouldn’t be the only one hemmed in by this rule. It impacts the top 25 Chrysler executives, no matter what their original compensation agreements with Cerberus Capital Management, the giant private equity fund that acquired the automaker in 2007.
The Treasury Dept. rules also restrict perks like the private jets that senior automotive executives have traditionally used to separate themselves from the traveling masses.
Considering the tremendous amount of work that will certainly be involved in reviving Chrysler, it’s hard to imagine who might take such a job. Working for a similar-sized company not on the federal dole could be worth tens, even hundreds, of millions of dollars in pay and other forms of compensation for a truly world-class executive.
On the other hand, hard as it may be to imagine, it’s not always about the money. Close insiders insist that Nardelli came to Chrysler, as much as anything, to prove himself after having his reputation sorely tarnished at Home Depot. And some of the country’s best talent regularly sign on for the comparatively low pay and harsh scrutiny that comes with senior government positions – such as the one Geithner accepted with the Obama Administration.
Of course, if Chrysler really can pull off a turnaround, the heroes of the moment could likely count on being amply rewarded once the automaker were to pay off its debt to society, so to speak.
Nearly three decades ago, Iacocca faced some stiff restrictions of his own in return for that earlier government rescue. But how things changed, as soon as he quite publicly handed over the last check to Washington. Not only did he buy a new Gulfstream corporate jet, but he bought that entire company. Chrysler rewarded Iacocca with some handsome bonuses, and the stock he had accrued suddenly proved to be worth mega-millions, as well.
The folks in the corporate towers often argue that their lavish pay reflects the risk they take. The big bucks handed out on Wall Street seemed to belie that concept. But perhaps Detroit can show that there are some real risk takers who could, in the end, justify their own rewards.
Kudos to Detroit Free Press reporter Justin Hyde for his own report on Chrysler pay caps.