WASHINGTON (Reuters) - Memo to U.S. companies seeking a bailout: When visiting Congress to ask for money, leave the private jets at home.
Chief executives from General Motors Corp, Ford Motor Co, and Chrysler LLC pleaded on Wednesday for $25 billion in federal assistance to help pay their suppliers, workers and other expenses at a time when car sales have plunged along with a souring economy.
But skeptical lawmakers blasted them for flying private jets to Washington and failing to make personal sacrifices in exchange for federal assistance.
“It’s almost like seeing a guy show up at the soup kitchen in a high hat and tuxedo,” said Rep. Gary Ackerman, a Democrat from New York.
“Couldn’t you have downgraded to first class or something, or jet-pooled or something to get here?” Ackerman asked the executives at a hearing held by the U.S. House Financial Services Committee.
Even Democrats who said they were sympathetic to the automakers’ plight expressed frustration that the executives used private jets while professing ruthless cost-cutting measures.
“I don’t know how I go back to my constituents and say the auto industry has changed if they own private jets which are not only expensive to own, expensive to operate and expensive to fly here, rather than to have flown commercial,” said Rep. Brad Sherman, a California Democrat.
“I also, though, must recognize that you’re in trouble mostly because of the economic downturn.”
Sherman asked the CEOs if they were willing to sell their jets on Wednesday and fly back to Detroit on a commercial flight. “Let the record show no hands went up,” Sherman said.
Ron Gettelfinger, head of the United Auto Workers union, also testified at the hearing but flew a commercial flight to Washington.
“I got a plane to catch, you know what I mean,” Gettelfinger said to reporters when leaving the hearing room.
GM CEO Rick Wagoner and Ford CEO Alan Mulally are required by their companies to fly by private aircraft for security reasons, according to company documents filed with the U.S. Securities and Exchange Commission.
The policy for Chrysler CEO Robert Nardelli is not required to be disclosed because the company is not publicly traded.
Lawmakers also grilled the CEOs on their pay.
“After all, Lee Iacocca symbolically accepted just $1 in annual pay. Why can’t today’s CEOs of General Motors, Ford and Chrysler do the same?” asked Rep. Paul Kanjorski, a Pennsylvania Democrat.
Former Chrysler CEO Iacocca famously cut his salary to $1 when Chrysler was on the brink of bankruptcy and eventually had to ask Congress for a loan guarantee program in 1979.
The CEOs said on Wednesday they have already taken significant cuts in pay and bonuses.
“I think I’m OK where I am,” Mulally said when asked if he was willing to cut his own salary. Mulally earned more than $22 million in 2007, according to a Ford regulatory filing earlier this year.
Wagoner said he has voluntarily reduced his salary by 50 percent and had used his own money to buy a large amount of GM stock, which he said is now worth very little. He did not say he was willing to make more significant pay cuts.
Wagoner earned about $15.7 million in compensation in 2007, according to a GM regulatory filing in April.
When Nardelli was asked during a Senate hearing on Tuesday if he would be willing to cut his salary to $1, Nardelli said: “I’d be willing to accept that.”
Nardelli, who was widely criticized for excessive compensation when he was CEO at Home Depot Inc, failed to tell lawmakers that his annual salary at Chrysler was already set at $1 when he became CEO last year. His other compensation is not fully disclosed.
Reporting by Karey Wutkowski, additional reporting by John Poirier and David Bailey in Detroit; Editing by Tim Dobbyn