I've been trying to control myself but I just can't. Like Howard Beale in the movie Network, "I'm mad as hell and I'm not going to take it anymore!!". Along with everyone else I've been following the dramatic turn of events in the global economy. The melt down of the credit markets has been startling and the continued fallout horrifying. I had thought however that the clueless "masters of the universe" attitude of many of the financial services executives in the face of the financial crisis was the worst I'd ever see.
President club trips to resorts after the collapse and government bailouts? Debates over whether or not to forgo eight and nine figure annual bonuses in the wake of total financial ruin for shareholders? The lack of rational thought and public awareness of the management of these firms seemed the height of arrogance if not outright stupidity. This was of course until the auto company executives came calling on Washington.
The largest of the "Big 3" auto companies is General Motors. CEO Richard Wagoner, after an extensive career in finance with General Motors, took over as CEO in 2000. GM stock was trading at $60 a share at the time. Today GM stock is trading at a little over $3.00 per share and the total market cap of the company is $1.7 Billion. Last year Mr Wagoner took home $14,415,914 in compensation, which represented an increase of 41% over 2006.
GM made the decision to double down on building large, inefficient SUV's over the last several years while Toyota focused on fuel efficient, hybrid technology cars and took over the lead as the largest auto company in the world. The results that followed were predictable. So GM, along with Ford and Chrysler, finding themselves in serious trouble decided to appeal to the US government for financial relief in the form of loans. Now here's where it gets interesting. Imagine you are working at GM and helping to prepare for these meetings. You are pulling financial data, health care costs, market trends and financial charts and graphs like crazy. You have all of the material ready, you've helped prep your boss for the grilling he's going to get on Capitol Hill and then as you board the company private plane to fly to Washington you think..."Hey wait a second. We're boarding the company private plane!!" Wouldn't you think at that point someone, anyone, would have leaned over to Wagoner and whispered into his ear, "Da plane boss? Da plane?". ,