clock menu more-arrow no yes

Filed under:


Are high interest rates keeping you in an apartment rather than a house? Do the kids have to wear the designer jeans another season? When you eat out, do you order water?

If you think you've got it tough, stop and ponder what happened to Lee Iacocca.Chrysler just released what its top executives earned last year and chairman Iacocca took an 80 percent pay cut last year. That's right, 80 percent.

While the typical blue collar worker has to wait for cash rebates or discount financing to afford a new car, very few have had to put up with the added burden of an 80 percent pay cut.

But that's the fate that befell Ia-cocca. For 1988 he received a scant $3.6 million, down from $17.9 million in 1987.

Of the Big Three chairmen, only Iacocca took a cut. Roger Smith, GM chairman, received $3.68 million, up from $2.38 million in 1987, while Donald Petersen, Ford chairman, received $10.5 million, up from $3.73 million. Ford and GM had record profits in 1988, Chrysler didn't.

Smith's base salary was $983,000, to which a $1.7 million performance bonus was added. He also exercised slightly more than $1 million in stock options.

Petersen's salary was $1.13 million. A $2.2 million bonus was added, perhaps for outearning rival GM. Pe-tersen exercised $7.15 million in stock options.

Iacocca was the lowest paid chairman based on salary alone. His salary was only $865,673. He was awarded a $759,254 bonus and exercised a little more than $2 million in stock options.

Big numbers for men whose job it is to sell cars. And keep in mind the average base price of a 1989 model domestic car is $14,287, not too insignificant on its own. That $14,287 roadblock is one reason men like Pe-tersen, Smith and Iacocca are offering $300 to $2,000 cash rebates or zero percent financing to move the merchandise.

Now don't let it be said this trio doesn't earn its keep. The eight-hour, five-day, four-week vacation routine is a rarity in those offices. But since those are the hours most other working stiffs put in, that's what we used to put their wages into perspective.

In effect, Petersen received $201,746.53 a week last year. That's $40,349.30 a day. When Petersen stopped to take a one-hour lunch for nourishment, he made $5,043.66. A 15-minute coffee break not only relieved the stress, it put $1,260.91 in his bank account.

That $14,287 car? In one hour Pe-tersen made enough to buy nearly three of them.

At that wage level, simple requests take on a new meaning, such as, "Can you spare a minute?" ($84.06) or, "Got a second?" ($1.40).

Smith was paid $70,942.30 a week in 1988 or $14,188.46 a day. His lunch contributed $1,773.55 to the kitty. A 15-minute coffee break earned him $443.38, only about a third of what Petersen made while sipping the brew, but then Smith drinks decaffinated.

Iacocca's financial stats are $70,453.40 a week, $14,090.68 a day, $1,761.33 during lunch and $440.33 during that coffee break.

That $14,287 car? A day's pay would leave both Smith and Iacocca a bit short of buying one. They'd have to work a full eight-hour shift on Monday and come back for seven minutes more on Tuesday - unless they took advantage of a rebate.