The revelation that Chrysler is paying millions of bonuses to keep top executives at the automaker while it cuts thousands of jobs ought to really help the Detroit Three get government bailout funds that already look like they are doomed.
The lead story in Friday's edition of the Detroit Free Press says Chrysler is paying about $30 million in retention bonuses to keep top executives on the job. Chrysler owes the bonuses under its contracts with about 50 executives, based on a retention incentive plan crafted early last year by former German parent DaimlerChrysler, when it was preparing to sell Chrysler, the paper reported.
Documents obtained by the Free Press show bonuses ranged from a high of $1.89 million to $200,000. At least six Chrysler executives are due to receive bonuses of more than $1 million apiece to stay through August 2009, the two-year anniversary Cerberus Capital Management buying 80 percent of Chrysler.
The agreements called for 25 percent of the bonuses to be paid February 2008, which they were and the remainder in August 2009. It's not clear what happens to those bonuses if Chrysler, if it exists at all, is sold.
Those promised the largest retention bonuses, according to the newspaper, are: Frank Ewasyshyn, executive vice president, manufacturing, $1.89 million; Frank Klegon, executive vice president, product development, $1.8 million; Nancy Rae, Chrysler executive vice president for human resources and communications, $1.66 million; Simon Boag, president, Mopar/global service and parts, $1.65 million; Steven Landry, executive vice president, North American sales, $1.63 million; and Michael Manley, executive vice president, international sales, marketing and business development, $1.53 million.
Chrysler's current top three leaders were not included in the $30-million retention bonus plan. They presumably have separate contracts. Chrysler Chairman Bob Nardelli as well as President and Chairman Jim Press joined the company after Cerberus Capital Management took over last August.
Former Chrysler CEO Tom LaSorda, now co-president and vice chairman, received a $15.7-million bonus from Daimler for helping with the sale of Chrysler to Cerberus. Reported earlier, LaSorda received a total of $20.7 million in total 2007 compensation.
The top executives of Chrysler, General Motors and Ford are scheduled to testify next week before a House committee on a proposal for $25 billion in bridge loans to keep them afloat. Executive compensation is expected to be a hot topic during those discussions.