More for stakeholders, less for themselves
August 27 2007 by Francis Adams
Apart from all the plausible reasons being churned out by observers on the naming of Richard Anderson as CEO of Delta Airlines and Robert Nardelli as Chairman and CEO of Chrysler – unarguably two of the most surprising changes at the top within a span of 15 days – one fact rings out loud: Both the men have proven backgrounds of being ferocious competitors, effective cost-cutters and neither of the two is into his new position with a “what’s in it for me?” goal. Not the least, for now.
With both Delta and Chrysler immersed in the process of rebuilding and rebirth, leave alone consolidation, it is unlikely that Anderson or Nardelli could have negotiated, what is now “highly-contentious and suspicious” handsome CEO pay deals – despite the fact that their salaries have not been disclosed. Comparatively, they seem to have agreed for less for the efforts they have vowed to put in to take Delta and Chrysler to their rechristened targets – remain independent and standalone companies that will deliver profits.
The loss-making automaker is hoping to regain its market share from its next-generation minivans that it rolled off, last week, at its Windsor Assembly Plant. Delta emerged from Chapter 11, only three months ago, in April. And with the
Chrysler has categorically said that it will remain unprofitable until 2008 and that Nardelli’s pay is going to be tied to the Auburn Hills, Michigan-based automaker’s performance. Nardelli also has unequivocally said that he hoped his own compensation would not become and issue in Chrysler’s ongoing contract talks with the United Auto Workers union, set for September 14, one of his first major challenges at Chrysler. “The last thing I would want to be as part of the new Chrysler is a distraction,” he told reporters in a news conference at the company’s headquarters. “It certainly is my hope that it doesn’t become an issue.”
The man nicknamed “The Little Jack” has since got into the act by trying to calm market and workforce fears. “Chrysler won’t reduce its capital spending despite recent difficulties raising money,” he told The
Anderson, himself a board member at Delta, may not afford to strike an attractive pay deal because, until recently, each of retiring CEO Gerald Grinstein’s two lieutenants, Chief Financial Officer Edward Bastian and Chief Operating Officer James Whitehurst, tipped to become CEO, were paid $382,500 a year. Delta also has some history over CEO pay, albeit in different situations: Facing criticism, Leo Mullin gave up $9.1 million in pay and bonuses because of the airline industry’s crisis. Grinstein too voluntarily relinquished his salary to reduce the carrier’s cost structure.