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 Akerson nevertheless left some $100 million on the table to head to Detroit in 2010.
He’s not doing a bad job. Profits are chugging along, hitting $1.6 billion 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 US sales make the slight first-quarter dip in market share look like a blip. 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, Akerson was paid $7.7 million in cash and stock last year. And he cannot earn more than $9 million this year because the US Treasury still owns a 32 per cent stake in GM and so sets the parameters for his compensation. That leaves 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 seven 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 telecoms companies and working at Carlyle, 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 one 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.