Working for a buck a year would amount to a multimillion-dollar pay cut for the chief executives of General Motors Corp. and Ford Motor Co.
GM's Rick Wagoner and Ford boss Alan Mulally both pledged Tuesday to work for $1 a year in salary if their companies got taxpayer help. That would mean substantially thinner pay envelopes for both executives.
Wagoner's total compensation for 2007 was $15.7 million and Mulally's was almost $22.8 million, according to Equilar Inc., an executive compensation research and data provider.
In terms of pay, that put them in the top quarter of CEOs in the Standard & Poor's 500 index -- while their companies were considerably further down the ladder. GM ranked 190th in the S&P 500 in stock market value last year, and Ford was No. 233.
The median compensation for S&P 500 chief executives was $8.8 million in 2007, according to Equilar, which gets its data from regulatory filings.
Robert Nardelli, chief executive of Chrysler, is looking at a big pay cut too: He has also said he would work for $1 a year in return for federal aid. But how big a pay cut isn't known; Chrysler is privately held, and Nardelli's pay isn't made public.
Like many U.S. executives, Wagoner and Mulally receive the bulk of their compensation in stock grants and stock options. The value of those awards is directly tied to the price of their companies' stock. GM's stock, which rose 26 cents to $4.85 on Tuesday, has fallen 80.5% this year. Ford's stock, which added 15 cents to $2.70, is down 60% in the same period.
Wagoner's 2007 compensation package included $11.7 million in stock-based compensation, according to Equilar, none of which he has cashed in because of the stock decline. Likewise, Mulally received stock grants and options valued at $12.3 million, but they are virtually worthless at Ford's current stock price.
Of course, if the shares rebound, so will the value of the stock-based compensation. In Wagoner's case, GM shares would need to rise above $29.11 before he could profit from exercising his stock options. Ford's stock needs to climb to $7.55 for Mulally's options to be "in the money."
In 2007, Wagoner received $3.4 million in salary and cash incentives, and Mulally was paid $9 million. In addition, Wagoner received almost $700,000, and Mulally got $1.4 million in "other compensation," which includes services such as personal security and use of corporate jets.
The latter has been a sore point with Congress, and both GM and Ford have said they are getting rid of some or all of their company planes. Wagoner, Mulally and Nardelli have all said they're driving to Washington to testify before Congress this week.
This isn't the first time an auto executive has volunteered to work for a token salary. In 1979, then-Chrysler CEO Lee Iacocca helped win congressional approval of a $1.5-billion loan guarantee by agreeing to a $1-a-year paycheck.