GM reduces executive pay, but it was a bit high to start with

Many of us, especially those of us from Michigan, are familiar with the struggles of General Motors, which was overtaken by Toyota as the number one US auto manufacturer. Many have lambasted GM and Ford for being far behind the curve on gas mileage and hybrids. Some stock analysts also criticize GM for being run for the benefit of the auto unions rather than shareholders. I have to admit, they do have a point; the UAW extracted far too many concessions to be sustainable.

However, GM is at least reducing executive pay to compensate for its mediocre performance. Rick Wagoner's base salary will be cut from $2.2 million to $1.65 million.

In comparison, James Sinegal, the CEO of Costco, was paid a base salary of $350,000 in 2006. His total compensation was $4 million, including what Forbes classifies as stock gains; these probably include capital gains and dividends from the Costco stock he owns. Costco is far better run and far more profitable than GM, and has good union relations. Waggoner made a total of $4.82 million in, I think, 2005.

GM's actions are in stark contrast to Northwest Airlines, which extracted hundreds of million dollars in wage cuts from its pilots, attendants, ground crews and staff, and paid hefty bonuses to its (obviously incompetent) executives to "retain" them. The same thing has happened at Delphi, the bankrupt auto parts supplier.



GM and Ford have a long way to go. They and the UAW have opposed stronger emissions and fuel efficiency standards, on the grounds that it would cost American workers their jobs and reduce car sales. Industries throughout history have made that argument, arguing that they will go bankrupt if forced to adopt stricter standards. They have for the most part been wrong.