Spare a thought for Daniel Akerson. The chief executive of General Motors just delivered another decent quarter on Thursday. On the same day, however, his former employer, Carlyle Group , went public. The private equity firm’s initial public offering wasn’t great, pricing below its original range. But Mr. Akerson nevertheless left about $100-million (U.S.) on the table to head to Detroit in 2010.
He’s not doing a bad job. Profits are chugging along, hitting $1.6-billion (U.S.) in the first three months of the year. The company has more than $30-billion in cash, a solid business in China and April’s U.S. sales make the slight first-quarter dip in market share look like a blip. Mr. Akerson is honest about how far GM’s operational restructuring still has to go. And his experience at Carlyle should come in handy for turning around GM’s European business, which lost $300-million last quarter.
For his efforts, Mr. Akerson was paid $7.7-million in cash and stock last year. And he cannot earn more than $9-million this year because the U.S Treasury still owns a 32-per-cent stake in GM and so sets the parameters for his compensation. That leaves Mr. Akerson earning barely a quarter of what Ford’s Alan Mulally took home in 2011.
Some of the disparity is justified. North America, GM’s largest autos money-spinner, cranks out a decent pre-tax margin these days – around 7 per cent in the first quarter, for example – but remains shy of Ford’s 11.3 per cent. And GM’s stock still trades at only a little more than half what’s needed for taxpayers to get all their money back.
After more than 30 years running telecom companies and working at Carlyle, Mr. Akerson was already a rich chap. And he’s hardly earning a pauper’s wage running GM. Americans on regular salaries will correctly assess his decision to go for $7.7-million instead of $100-million as a problem reserved exclusively for the 1 per cent. But his loss has been a gain for taxpayers – even if only operationally so far. And surrendering that much cash isn’t a choice too many would make.