How forthcoming has Chrysler CEO Bob Nardelli been about his compensation? Not very, if you ask corporate governance experts.
When lawmakers asked the CEOs of Detroit's Big Three automakers whether they'd be willing to accept a $1 salary, Nardelli assented, but he failed to mention that he was already receiving a $1 salary and had been since he joined the company in 2007.
Nardelli could be earning considerably more than just this minimal salary: It is unknown if Chrysler's majority owner, private equity firm Cerberus Capital Management, pays Nardelli an additional salary or any other form of compensation for running the struggling automaker.
"I would be surprised if the extent of his monetary gain for work at Chrysler was just a dollar," said Charles Elson, director of the Center for Corporate Governance at the University of Delaware. "Chrysler is not a philanthropic activity and I would be surprised if he approached it as such."
The lack of transparency stands out, as it was just last week that lawmakers put the spotlight on the compensation received by the CEOs of some of the nation's largest banks that received taxpayer dollars.
The week prior, President Obama announced new limits on executive pay for institutions receiving government funding. Chrysler accepted $4 billion in January and is expected to ask for additional money from the government in order to avoid running out of funds.
"It should be disclosed how much he is getting from the parent company," said James Reda, an independent compensation consultant. "What is his arrangement with Cerberus? He's the hired-hand to turn it around and, A, it is not working and, B, what is his arrangement now that he is taking government money?"
By comparison, GM, a publicly traded company unlike private Chrysler, has revealed that its CEO Rick Wagoner will earn $1 for 2009 and will receive no bonus for both last year and this year. In addition, GM's board of directors has also reduced its own compensation to $1 for 2009.
Chrysler and GM are required to submit their restructuring plans to the president today. One condition for receiving funds through the bank rescue plan, the Troubled Asset Relief Program or TARP, was that both companies had to limit executive compensation such as bonuses and incentive payments, as well as eliminate perks such as corporate jets.
During a congressional hearing in November, Sen. Jon Testor, D-Mont., asked Nardelli, "Back in 1979 when we bailed out Chrysler … Lee Iacocca said that he would take one dollar in executive compensation until those companies became -- until Chrysler became a profitable model. Where are you guys at on a proposal like that?"
Naredelli replied, "I'd be willing to accept that."
According to Nardelli's personal spokesperson, Bob Marston, Nardelli has received that salary since joining Chrysler. Nardelli had a consulting contract with Cerberus prior to the company's acquisition of Chrysler.
Marston said that ended when Nardelli became the CEO of Chrysler. Cerberus announced it would purchase Chrysler from DaimlerChrysler in May 2007. Nardelli was named CEO in August after the sale was completed.
Prior to working for Cerberus, Nardelli was the CEO of Home Depot for six years. He received $210 million when he left the company after being criticized for his pay and the performance of the company's stock during his tenure.