November 20 2008

Some CEOs Should Just Say No To Private Jets

Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler all deserve to be strung up by their toes.

I am sure by now you have heard that these three CEO’s went to Capital Hill to beg for the bailout money for their car companies on Wednesday.  The “delicious” irony is that these three gentleman arrived in Washington D.C. on private jets instead of flying commercial.  To add even more insult to injury, Mr. Mulally of Ford took one of the eight private jets owned by the company according to the Washington Monthly.

According to Money Central, it is estimated that each roundtrip on the GM plane for Mr. Wagoner costs the company $20,000.  As Mr. Wagoner lives in Seattle, WA, GM ferries him back home every weekend from Detroit on the private plane, meaning they are dumping an estimated $20K a week in to letting him go home.  Lets say that he takes 52 trips a year on the private plane, it is costing the company $1,040,000 a year to move him around the country.  First class averages out to about $1,600 between any two destinations domestically, so even if they flew him first class every where, you are looking at a cost of $83,200 a year, a savings of $956,800.  How about coach?  Approximately $30,000 a year, a savings of over $1 million a year.  (I personally find first class for domestic flights for anyone to be excessive and ridiculous)

This is only a very small slice of the problem with these companies, but if this is any indication of the mismanagement of funds at these companies, then I almost wish they would fail.  Mind you, I have no desire to see factory workers lose their jobs, but this climate of CEOs being treated like messiahs who walk on water has to end.  No CEO is worth a $28 million dollar pay package.  Golden parachute clauses, insane perks, excessive pay packages, no CEO is worth the amounts of money these men receive.

I do have to applaud the Representatives who called them out on this debacle.  From Rep. Brad Sherman (D-Calif.), as quoted by the Washington Post:

“I’m going to ask the three executives here to raise their hand if they flew here commercial,” he said. All still at the witness table. “Second,” he continued, “I’m going ask you to raise your hand if you’re planning to sell your jet . . . and fly back commercial.” More stillness. “Let the record show no hands went up,” Sherman grandstanded.

I think “grandstanded” was unnecessary in the article, and I am sure it was a bit of a play, but it was a question that did need to be asked of these men.  The commentary was continued by Rep. Patrick T. McHenry (R-N.C.):

“I’m not an opponent of private flights by any means, but the fact that you flew in on your own private jet at tens of thousands itself dollars of cost just for you to make your way to Washington is a bit arrogant before you ask the taxpayers for money.”

I have mixed feelings about the bailout, and I almost always come back to, “Would the government help my family out if our business was in a similar situation to these companies?”, and the simple answer is ‘no’. I understand the theory that these companies are too big to allow them to fail, with tentacles reaching in to too many other industries, but I have to wonder why my tax dollars have to be involved in cleaning up the poor management of companies.

As I said, this is just one small slice of the problem with the American car industry, but it is an insulting situation to say the least.  If anything good comes out of this whole thing, I hope that every one takes a look at every last one of these CEOs with their horrendous paychecks and perks.  And, as a side note, if you know of one good reason why these men and women are paid these insane amounts of money, please explain it to me.  I have never gotten it, and I’m not sure I ever will.

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