Chrysler gives bonuses, asks for bailout
Posted
Nov 14 2008, 12:52 PM
by
Kim Peterson
Rating:
Chrysler is asking the government for a bailout. It's laying off employees and cutting salaries. It's a company in trouble.
Oh yeah, it's also paying $30 million in bonuses to dozens of top executives.
That's the end result of a poorly-timed plan to keep Chrysler together as it was being sold. The company didn't want top executives to leave during the transition, so it promised big money for people who stuck around. Now, Chrysler is asking the government for billions of dollars in aid while it writes million-dollar bonus checks out to A-list employees. How's that for awkward?
In Chrysler's defense, this bonus plan was created in April of 2007. The company had no idea that its industry was headed for collapse, or that the executives it was desperate to keep might have a hard time finding employment at a Jiffy Lube at this point.
The bonuses are going to be another sticking point in Chrysler's request for government aid. The industry is asking for $25 billion in low-cost government loans. Chrysler is a private company, and may be asked to hand over a lot of information about its finances and how it handles its money. That includes information on those controversial bonuses.
Bonuses are under fire at other carmakers. Ford has cut some merit raises and bonuses for next year. The company is quickly running out of money, and is slashing its spending.
Executives from Chrysler, Ford and GM are headed to Congress next week to make their case for $25 billion in aid. The bonus numbers will quickly become a central point of the conversation, and deservedly so.
As a private company, Chrysler can do whatever it wants when it comes to compensating its executives. But a private company asking for a government bailout cannot. Better brush up on those resumes, boys, because the good times are coming to an end.
Related reading:
Obama floats $50 billion automaker bailout
Should GM just file for bankruptcy?
Automakers ask for bailout to keep wheels turning
The death of the minivan (and Chrysler?)
