Rick Wagoner's 33% Raise in 2008

Just over a week ago, I wrote this post noting GM's Rick Wagoner's new, reduced role at the perennially-struggling auto maker. After reading the Wall Street Journal's piece extolling the new COO, Henderson's skills, I wrote,

"Call me sceptical- hey, it's the name of the blog- but I don't see how the same guy who, as CEO, lost 1/3 of GM's value, is going to magically become an asset to the firm once he has a COO. If this were so important, why didn't he do it several years ago?

Perhaps GM shareholders, of which I am not one, have the pleasure of seeing Wagoner at last stop wrecking the company by his operational role as CEO. The piece concluded with Wagoner opining on performing less operational duties...."

Now, upon returning from vacation and catching up on past issues of the Journal, I see an article from the Friday, March 7th issue of the paper, announcing Wagoner's compensation increase for 2008!

That's right!



The GM board has decided to pay Wagoner 33% more in cash and stock for the coming year, as compared with the at least $1.68MM he was paid last year.

As the Journal notes,

"a 33% raise for 2008 and equity compensation of at least $1.68 million for his performance in 2007, a year for which the auto maker reported a loss of $38.7 billion."

According to the Journal article, Wagoner's compensation increase is part of a general management package including awards of $1MM or more for the new COO, Henderson, Vice Chairman Bob Lutz, and others.

If I were a GM shareholder, I think I'd be selling. This is the type of unlinked premium pay for non-performance that has Congress, unions and average Americans shaking their collective heads in dismay.

After frustrating Kirk Kerkorian's attempts to add value to the company, and seeing off attempts by Carlos Ghosn to seek a partnership with his firm, Wagoner has presided over shareholder losses as depicted in the nearby five-year price chart. The Yahoo-sourced chart shows GM's stock price plunging some 25% during a period in which investors in the S&P500 Index enjoyed more than a 50% increase value.

How in the world can GM's board defend this latest action? Are they afraid Wagoner will leave GM if he isn't paid more, and possibly clear the way for the company to actually make money?

Or that some other large US company is clamoring for Wagoner's value-destroying skills?

Honestly, sometimes corporate America is its own worst enemy. This is clearly one of those times.