GM's G. Richard Wagoner Jr. leading by example

THE ASSOCIATED PRESS

GM Chairman and CEO G. Richard Wagoner Jr.

News about more layoffs in GM's North American operations today — this time white collar workers — was not a huge surprise. Devastating, but not a surprise. It's no fun whatsoever to be laid off, especially in this brutal economy. However, what wounds on top of the layoffs announced by GM chair G. Richard Wagoner Jr. was the added detail that health benefits are being suspended for company retirees. GM justified this particular decision — apart from the need to raise $15 billion by 2009 — by saying the company would top up pensions from its "overfunded" pension fund to help compensate for Medicare and supplemental insurance.

Boy, there's a promise you can take to the bank.

It appears U.S. retirees are being thrown overboard. Canadian retirees would appear to be in a better place than their American counterparts simply because, with all its problems, Canada's health care system is not the same two-tiered monster in place in the United States. (Yet.)

In the first place, the U.S. Medicare system for Americans 65 years and over has been criticized for years for restricted care through a drastically underfunded plan. Some critics have warned it's in danger of going broke completely, a phenomenon that doesn't feel so absurd in a week in which the federal government is bailing out both huge mortgage funds, Fannie Mae and Freddie Mac. There's only so much money and gigantic debt, including the U.S. government's.

Worse, during many years based in Washington, I often saw notices in physicians' offices saying they wouldn't accept Medicare patients or that the plan was severely restricted. Often, it was simply a word-of-mouth understanding.

That's why GM workers negotiated health benefits for their retirees in the first place.

Granted, GM announced it is cutting cash bonuses. Without at least that, today's pile-on of bad news would have been grossly immoral. Still, although one strained to hear, what Wagoner did not say, was that he would cut his own base salary, or that other executives were stepping up to the plate. It would have been a significant gesture. According to analysis by The Associated Press, Wagoner's pay increased by 64 per cent to $15.7 million (including bonus) in 2007 — even as GM endured $39 billion in losses and the share price plummeted by $19. Besides, as the article reported:

"Compensation has become a shell game,'' said Richard Ferlauto, director of pension and benefits policy for the American Federation of State, County and Municipal Employees, a Washington labor group.

"So they take away the bonus,'' he said, "but then they still come up with ways to make sure the executive gets a big payout.''

Breaking the terms of a contract with the most vulnerable of your workers — seniors on fixed income — appears pretty heartless by executives who have made piles and piles of money out of their GM gigs over the years — especially when Wagoner announced today's plan was "a strategy to win" and not just one to "survive." 

Comments

[Jason Seib]

Honestly does this surprise anyone? Whenever a company has a rough shake up the people in the boardroom hardly ever take any meaningful pay cuts while people in the media protest that they should be leading by example and taking a hit to there own pocketbook...

To be entirely fair if I worked for a multi-billion dollar company and was allowed to set my own salary I can't say I'd be falling on any swords just to make a few people feel better for an afternoon either... Not saying whats happening is right, just that its the very nature of the corporate beast... The owners don't really own the company but create their own pay structure and then we all get surprised when they take advantage of it.