General Motors — or Government Motors, depending on how clever you think you are or what line of the political divide you happen to camp out in — recently had a salary cap placed on executive compensation by the federal government, according to the Detroit Free Press.
The United States Treasury has decided to freeze CEO Dan Akerson’s salary preventing it from increasing beyond last year’s $1.7 million. Ackerson, who succeeded former GM CEO Edward Witacre in September 2010, earns a reported $9 million per year including his $1.7 million salary, $5 million in stock, and $2 million in restricted stock. In addition, the Treasury Department has frozen, or limited, the compensation packages of around 25 of the company’s highest paid executives for 2012. Indeed, the Treasury has stated that executive pay has dropped by nearly 12 percent from 2011 to 2012.
With the federal government still owning about 26.5 percent of GM stock as a result of the government bailout back in 2008 – and GM still owing the U.S. government roughly $25 billion — the Treasury Department is exercising its power to limit executive compensation.
Not content with simply taking it on the chin, GM has voiced its concern over the recent moves by the government to curb salary spending. The American automaker warned of a significant risk of executive turnover should the federal government continue to implement salary limits, arguing that luring and maintaining top talent will prove difficult should limitations continue or increase. As it stands now, at least two top level executives have left GM since 2011.
While some will no doubt look upon the government’s involvement with great disdain, others will undoubtedly be please to see the government taking active steps to limit lavish pay packages – especially for top level executives from companies that received financial bailouts by the government. Other companies such as AIG, who still owe roughly $50 billion in taxpayer money, and Ally Financial, who still owe about $12 billion, have also been subject to compensation limits at top levels.
So how does Dan Akerson’s pay compare to other top auto executives? Not well actually. While Akerson’s combined $9 million in earnings would be more than enough for your average Joe, it’s peanuts compared to Ford CEO Alan Mulally, who earned a cool $29.5 million last year, while Sergio Machionne, head of Chrysler and Fiat, received a combined $22.2 million from Fiat – declining payment from Chrysler, which Fiat owns a 58.5-percent stake of.