Union questions auto execs' pay packages

DETROIT -- The United Auto Workers says it knows it needs to help Detroit's automakers cut labor costs to reduce the gap in production expenses with Asian rivals. But as talks continue on new contracts, the union also is questioning why top executives at the automakers are paid what they are.

During talks with GM, the UAW pointed out that while the automaker has complained that hourly wages and benefits are dragging it down, it has continued awarding bonuses to its top executives.

GM CEO Rick Wagoner earned $9.3 million in salary and bonus in 2006, nearly double what he earned in 2005.

Chrysler's new CEO, Bob Nardelli, became a symbol of corporate excess when he left Home Depot early this year with a $210 million severance package. Ford's new CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

Some top executives have taken steps to curtail their pay during automakers' recent financial difficulties. Former Ford CEO Bill Ford took only $1 in wages during his tenure and donated much of his stock-based pay to charity. Wagoner and his top lieutenants took a base pay cut, although they continued to get bonuses.

Pros and cons

The automakers didn't want to comment on the issue.

Critics say automotive executive paydays are out of line with what's happening in the industry. "It seems like something out of the gilded age," says Chris Kutalik, an editor at Labor Notes newspaper. "It's such a glaring disparity."

Others say executive salaries are determined by what companies are willing to pay for the talent. "There's pros and cons to every bit of it. Do you want the job of being a CEO of a bankrupt supplier for nothing? The question becomes what's the right amount of pay for the job that's being rendered," says Laurie Harbour Felax, auto industry consultant at Stout Risius Ross.