GM CFO search complicated by US pay rules - WSJ (oh noes only $1 million a year in salary)

[UpInArms]

Source: Reuters

CHICAGO, Oct 17 (Reuters) - General Motors Co's bid to find an outsider to replace its chief financial officer is being complicated by pay restrictions imposed on companies that got big U.S. government bailouts, The Wall Street Journal said on Saturday.

GM executives met recently with U.S. Treasury pay czar Kenneth Feinberg and left with the understanding the automaker would be able to offer a significant amount of stock but no more than a $1 million annual salary, the newspaper said, citing people familiar with the matter.

Sources have told Reuters that GM directors in September backed a plan for CFO Ray Young to leave the company.

GM emerged from bankruptcy in July after receiving $50 billion in emergency U.S. financing.

Read more: http://www.reuters.com/article/bondsNews/idUSN1737922020091017

[w4rma]

1. Are they limiting their search to aristocratic families? (nt)

[Ruby the Liberal]

2. Maybe Ken Lay can call it in from the beach?

[Bozita]

3. Is this one of the jobs for which Wall Streeters threaten to leave?

[safeinOhio]

4. Entry level job. What do you expect?

The last guy watched billions go and was paid like some one that made them money.

[Psephos]

5. Rather like an NFL team in need of a quality receiver only able to offer a million.

Talent pool gets a little thin at those numbers.

[DissedByBush]

9. Someone who can turn the company around is worth far more than that

But you'd think they can sweeten the pot with some serious stock options to overcome the salary deficit.

[Psephos]

10. hope so

structured in a way that prevents abuse, such incentives are a big win for everyone involved

[No Elephants]

25. I bet I could find a bright, capable person for $1 million a year (not to mention perks)

who would perform better than his or her predecessors. In fact, I bet I could find hundreds, if not thousands.

It all depends upon what you perceive your hiring pool to be.

[Psephos]

31. But then, you're not the one in charge of hiring. :)

I would do the job myself for a mill, and save GM the search $$ as well.

I would also gladly fill in as a wide receiver for the Lions for just a million, and could do a creditable job of special-teams kicking to boot. ;)

My guess is that neither the GM board nor the Lions GM will give me the chance.

I will, however, take you up on your bet about finding hundreds or thousands of candidates. Who do you think should be on that list? It's worth discussion.

[WriteDown]

32. Well first we must discuss...

Your max distance and hang time.

[Psephos]

35. With your demonstrated sense of corporate jargon and concepts...

...consider yourself already in the top half of the resume pile.

B-)

http://www.youtube.com/watch?v=D1DQBeS4L1Q

[No Elephants]

36. I didn't mean I would charge to find someone. That, I would do just for the fun of it.

And straight, on the level, reimbursement of actual, reasonable expenses, of course (if we are going to be literal--and I usually am).

Sorry, but your asking me to create a list of names off the top of my head shows you do not get my prior post at all. Generating the list you request in any meaningful way would take phone calls and other research, leg work, testing and interviewing.

My point was simply that, in a country of over 300 million, you can find someone very capable of doing the job, even if the starting salary is "only" a million plus perks.

The person doing the search would have to be creative, energetic and able to think outside the box, though. If you're only looking for people who are doing this kind of things in other companies, you are not going to cut it at one million.

[Psephos]

40. Don't worry, NE, I was just kidding

I'm sure you've got WAY better things to do than generate candidate lists that will never be used. :)

I do agree with you that there's less relationship between salary paid and talent obtained than these CEO/CFO jerks want us to believe.

The problem is that hiring a cheap unknown person, regardless of talent, is an actionable decision if it doesn't work out, and no board is going to take that risk. If they put in someone with a track record, then regardless of any outcome short of fraud and gross negligence, they're off the hook. But if there's no track record? Then the lawyers start sharpening knives.

It's also a serious problem that corporations have been incentivized to write exceedingly narrow job descriptions. Finding someone who meets the exact criteria of the open position rules out the rookies, and turns the sliver of remaining talent pool into a oligopsony.

So really, it's a problem of culture, not competence. Unless we go after that culture root and branch, discussions such as ours will remain the province of political discussion boards.

As you know, I loathe the corporatist mindset. But I also loathe cancer, which has cost my family. Neither loathing has so far produced tangible results.

[ManicZen]

6. Only 1 million

I'm sorry maybe I am naive but they can't find ANYONE of quality to work for a million?

Is it necessary that CEO's, CFO's and COO's earn 500 times what they're average employee makes?

[rayofreason]

7. People at the level they want...

...can command higher salaries in companies with no bailout restrictions.

I'd take the job work for 2 years, then quit and retire, but I am not qualified. Same for a lot of people. Just see some posts on this thread.

[No Elephants]

26. Please see Reply 25. This is a nation of 300 million people. And then, there's the rest of the

world.

If you think you have to hire away the head of AIG or Nestle's or some other mega corporation, then, sure, you are not going to get them to leave their jobs for a measly one million. However, if you want someone who is bright and capable, you can fill the position for $1 million a year.

You have to be very good at hiring, though, instead of just trying to hire someone who already has or has had a top position in a huge corporation.

[rayofreason]

34. Would you want someone...

...as CFO of GM who had NOT had experience in some measure of leadership of a huge corporation? GM is in deep doo-doo and anyone who is going to take this job better be extremely good at being the CFO of a major corporation. And anyone who would be hired should be able to demonstrate that ability or the potential for same, not just say "Hey, I am good and I can do the job, even though I have never done something like this before."

There are plenty of smart and capable people out there. Take, for example, a Nobel Laureate in Physics. Pretty smart and capable. And not qualified for this job.

How about universities? When they hire deans they want someone who has been a department Chair. For a Provost, they want someone with Dean experience. For a President, someone who has been a Provost. It is always the same - you typically hire from one level below so that you have some idea of what you are getting and that the experience that the hire brings is commensurate to the job. And at the CFO of GM level that means someone who has had a top position in a huge corporation. If not, then the candidate is not qualified.

Of course the Administration could just appoint someone. I am sure that there are plenty of Chicago politicians who would love a $1,000,000/yr job. The ultimate in patronage payback. Come to think of it, could a political hack do worse than has been done already? We could ask Larry Summers to find somebody. Maybe someone who used to work at Harvard.

http://www.boston.com/business/articles/2009/10/17/harvard_loses_18b_in_cash_placed_in_high_risk_investments/

[No Elephants]

37. False dichotomies. My post said I would find someone bright AND capable of doing the job.

I probably would not hire a professor or Nobel in Physics. Then again, you never know.

[rayofreason]

39. Then we are agreed...

...bright AND capable.

And to me "capable" means someone who has demonstrated the required abilities or abilities close to those required, thus someone who has held a top position in a huge corporation, which generally has total compensation well in excess of #1,000,000. Back to square one.

Regarding the "out of the box" candidate (i.e., a Nobel Laureate in Physics), quite a number of urban school systems have hired "out of the box" leaders, like Seattle, which hired an Air Force General.

http://findarticles.com/p/articles/mi_m1355/is_3_95/ai_54724851/

I met Stanford once (when I was doing some work with Seattle) and had a long conversation with him in his office. Impressive guy. And he got a lot of credit for leadership and promotion of high standards. However, all was not well behind the curtains and hard data showed that there was not much change. Take a look at the situation after Stanford.

http://seattletimes.nwsource.com/html/localnews/2003664904_supe13m0.html
http://seattletimes.nwsource.com/html/education/2003308371_graduation17m.html

58% graduation rate.

Great press does not equal accomplishment in hard data terms, and out of the box candidates are no salvation. And Standford was probably one of the most successful of the "out of the box" school district Superintendents in recent memory. Many of the others failed quickly. Again, not to say that a traditional candidate would have done better, but I find it instructive that every school system that has gone with an "out of the box" approach swings back to a traditional candidate the next time around.

For a company as big and important as GM in such a perilous state, I would feel very uncomfortable with an out of the box CFO. Like I said, back to square one.

[ccinamon]

8. "Qualified" people ran the company into bankruptcy...

why not give an "average" person a chance to run the company...how could they possibly do a worse job....and chances are, they are used to a budget and so could actually do the job BETTER!

[katkat]

11. about being qualified

About being qualified, does anyone who's worked for a large company seriously believe CEOs etc. are highly qualified? Most of them are idiots, and the lower levels of management below them know it. You could take a reasonable intelligent person anywhere in the company from the lower levels and they'd do a better job, a more responsible job, than one of those greedy self-obsessed idiots.

For example, how long do you think it would have taken one of us working for Detroit to say, uhh, SUVs can't go on forever, better cover our bases.

[WriteDown]

18. Every lower level employee thinks the higher ups are idiots....

Nothing new there. And if the lower level employee gets promoted then he becomes the new idiot. Seen it 1000 times when people are promoted into management.

[No Elephants]

27. I thought my bosses in one place were some of the smartest people I'd ever

seen in action anywhere, but that was a small, relatively new business that they had started.

Not always, but all too often, the Peter Principle gets proven true, especially in larger places and, of course, bureaucracies, or places run like bureaucracies.

[WriteDown]

30. I've had bosses I thought were geniuses....

but you're right in that that is a rare occurrence.

[No Elephants]

38. You agree with me? Too busy for executive searches now. I'll be too busy restoring my reputation!

;-)

Now that I think about it, the so-called geniuses shared a flaw--no people skills. Brains, greed, ego and a willingness to work long hours, but no clue how to treat the people who worked for them. (I was a workaholic then, too.) It was so bad, hiring firms in our area started balking when we called them. So, when the firm got to a certain size, it imploded. Fortunately, I had left a few years earlier.

[Dreamer Tatum]

23. I've yet to meet a stupid CFO of a large company

and a company as complex as a multinational carmaker needs a pretty sophisticated financial mind at the helm.

But I'm positive that there are many, many DUers who could do the job with distinction. :eyes:

[No Elephants]

28. I couldn't, but I bet I could hire someone who could.

[fasttense]

12. These people need to get over their love affair with themselves.

A million a year is not enough? Really?

These CFOs are just so f**king smart that they ran practically every corporation into the ground but they are worth more than a million a year?

They devastated and destroyed (hand in hand with CEOs) the once hugely profitable, most expansive American corporations in the world and they are worth MORE than a million a year?

Seriously, people just buy into this crap without thinking. NO ONE is worth more than a million a year. I know some people get paid much, much more than a million a year but that does not mean they are worth the salary and compensation.

What did that last CEO of GM get paid? I bet it was a whole lot more than a million a year. And what did he do? Why he ran GM into bankruptcy. Now, we want to find someone just like him?

Japanese CEOs and CFOs don't have over inflated salaries and seem to be doing much, much better than American corporation.

Man the American uber wealthy certainly need to get over their irrational sense of self importance.

You would think GM was looking to hire a King or Queen?

[MetaTrope]

13. The caviar at those business lunches will taste like dust...

[tomm2thumbs]

14. give the job to a returning veteran

[AngryAmish]

15. Remember, you have to live in Detroit to take this job

It is hard to attract good people to Detroit since it is such a shithole.

[robo50]

17. I'm sure, at $1 million a year, a 20 mile commute would be possible

as would a four day week.

Why would the CFO HAVE TO LIVE in Detroit? Computers and corporate rooms in NYC, or other places, would make this guy/girl available worldwide from anywhere.

Sorry, living in Detroit, not required, in my estimation.

[WriteDown]

19. Ah, the myth of the teleconference....

Trust me, its not all its cracked up to be. Most of the time being there in person is 100x better.

[robo50]

20. Yeah, but wouldn't the CFO of GM want to be in NYC, where the stock

market can be manipulated daily by a CFO of GM? He can read spreadsheets anywhere, and fly into Detroit if needed for a day's meetings.

I'll take the job at a measly $1 Mill a year, for two years, and do my best to make GM look like they are making money, and the stock doubles in price, while I love in a NYC penthouse. Easy job!

[WriteDown]

24. Not exactly...

The reason that people like CFO's and CEO's are paid so much has a lot to do with their network. They tend to know CFO's, CEO's at competitors, suppliers, etc.

[DBoon]

16. Just outsource the job to another country

I'm sure there are plenty of CFO candidates in India or the Philipines wwho are fully qualified and would take this job.

It works for the rest of their workforce - why should a CFO be any different?

[robo50]

22. Yes, I think they have forgotten about all the other

Americans who lost their jobs to less-paid men and women.

Somehow we need an American to run their financial offices? THAT hasn't worked for the last 10 years or so.

[bemildred]

21. Oh damn, complications.

We could wind up with some naive CFO not entirely motivated by greed and self-interest.

[One_Life_To_Give]

29. Prior Experience as CFO of Fortune 100-500 Level perhaps?

If they are looking for someone who already has several years experience as a CFO with a company on the Fortune 500 list. Then it's not surprising that candidates are not willing to take a cut in pay to go work for GM. If you want to hire someone who has been CFO of a 300-500 person company, then you should be able to find someone. Now wether or not they are really ready to take on the job for a company the size of GM is another story.

[MARALE]

33. If you have a forward looking CFO, you may get one

This would be a great opportunity for a CFO to prove him/her self. The $1M is only till they pay back the loan from the government. If the person could help in turning around the company, they could have a potential of making a good rep for themselves and getting a lot more in the future. Also I think that stock is a good way to pay someone because if they do make the company good, the stock will be a good thing to have.