GM’s Whitacre in line for $9 million pay package

February 20, 2010 http://detnews.com/article/20100220/AUTO01/2200310

GM’s Whitacre in line for $9 million pay package

CEO’s pay needs feds’ OK; Henderson retained as adviser

ALISA PRIDDLE
The Detroit News

General Motors Co. Chief Executive Ed Whitacre Jr. is in line to get a $9 million pay package and the automaker, in a surprise move, rehired former CEO Fritz Henderson as a $60,000-a-month consultant.

Whitacre, who took over as acting CEO Dec. 1 after Henderson was pushed out, will receive cash salary of $1.7 million annually, retroactive to Jan. 1, according to a filing Friday with the U.S. Securities and Exchange Commission.

The pay package has been approved "in principle" by the U.S. Treasury’s pay czar, Ken Feinberg, but he could still opt to reduce it. The compensation must have Treasury’s support because the government has to endorse pay for the 25 highest-paid executives of companies that received significant federal aid.

Henderson stands to earn more than $615,000 this year from GM, about a third less than his salary when he left in December. He will be paid $59,090 monthly plus expenses for an estimated 20 hours of consulting on international operations.

"I’m surprised by that," Charles Chesbrough, chief economist with CSM Worldwide in Northville, said of Henderson’s return.

In 2012, Whitacre will start to accrue $5.3 million in stock over three years as part of his salary compensation. It will not be a lump sum, but will be paid on a predetermined schedule that still has to be worked out, said GM spokeswoman Noreen Pratscher.

Whitacre is eligible for a further $2 million in restricted stock that is tied to the company’s performance. The CEO still must be with the company to receive this stock. A timetable of when it will be made available has not been released but a similar package for Henderson was only redeemable after GM repays its government loans. GM has said it hopes to make restitution by June. Whitacre has previously said he did not want to be a long-term CEO.

Whitacre took the CEO job permanently Jan. 25 after a short outside CEO search. He won’t receive any pay for his role as board chairman, according to the filing.

"He’s got a tough job to get this company off the public dole as soon as possible but if he can get a successful IPO this summer and the stock stabilizes, it’s probably money well spent," Chesbrough said.

Whitacre has not proven himself yet, Chesbrough said, but he helped GM emerge from bankruptcy faster than anyone anticipated "so the signs are pointing in the right direction."

Henderson, a GM veteran, took over the top spot March 29 when Rick Wagoner was asked to leave by the Obama administration. Henderson resigned Dec. 1 under pressure from Whitacre and the board but was on GM’s payroll through the end of the year.

"I question the thinking of bringing him back unless Whitacre needs more time to transition into the position," Chesbrough said. "They want to pick his brain as they continue to globalize operations."

Henderson’s new duties with GM were effective Thursday. His contract is month-to-month through Dec. 31, but can be terminated at any time, Pratscher said.

Henderson did not return a message seeking comment Friday.

Though approved in principle by Feinberg, Whitacre’s compensation is still subject to formal government approval as a condition of GM accepting $50 billion in government aid under the $700 billion Troubled Asset Relief Program.

Feinberg "is still in the process of determining the executive compensation packages for top 25 executives at the remaining firms receiving exceptional TARP assistance — including General Motors," Treasury spokeswoman Meg Reilly said Friday. "We expect that those rulings will be released within the first quarter of 2010. We are not going to provide a running commentary on that process, but it’s clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance."

The Treasury Department owns roughly 61 percent of GM.

While Henderson was in the top job, Feinberg ordered a 25 percent cut in his salary to $950,000 and pay for GM’s top 25 executives fell 31 percent for salaries and 20.4 percent in total compensation.

David Shepardson contributed.

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