Edward E. 'Ed' Whitacre, Jr.
General Motors chairman Ed Whitacre isn't much of a wallflower -- but then, no one earns a resume like his by staying quiet. In keeping with his outspoken personality, yesterday Whitacre came out swinging against the $500,000 salary cap imposed by the U.S. government on executives at companies that accepted bailout dollars. You know, companies like GM.
Whitacre argues that the $500k cap is too low to attract talented executives to top-level positions. He points specifically to GM's CFO desk, which is currently occupied by Ray Young, although the board of directors wants Young to step down as soon as possible and to replace him with someone new.
On the one hand, Whitacre has a point. As shocking as it may be to those of us in the middle-class, CFOs typically earn well above $500,000 per year. (For reference: Young's takehome pay in 2008 was $850,000, while Ford's CFO, Lewis Booth, currently pulls in $1,075,000.) Since financial management ranked near the top of "Old GM's" biggest problem spots, hiring a talented replacement for Young is of the utmost importance to GM's future.
On the other hand, Whitacre should understand that whining about $500,000 salaries isn't a very persuasive appeal to men and women on the street, who typically live-in households earning ten times less. So as far as marketing is concerned, the CEO's comments don't do much to buff GM's brand.
Also, we have to wonder: if a potential CFO's ultimate criteria for taking the job is Big Money, is he/she necessarily a good fit for a struggling company like GM? And if the CFO-to-be is only persuaded by making dough, what does that say about his/her ethics and/or financial management skills? Just a couple of thoughts.
Despite his comments, we're happy to see that Whitacre seems to have his feet pretty firmly on the ground: "I don't think (the caps) will be lifted, but hopefully they'll be modified." Of course, that's not likely to stop him from nagging.