Executive Salaries at Defense Firms Irk Congressman

The Pentagon should terminate the taxpayer-funded portion of any unjustified executive salaries or bonuses at TRW and other defense contractors, Rep. John D. Dingell (D-Mich.) said Friday.

Dingell, chairman of the House Energy and Commerce Committee, made his request in a letter to Defense Secretary Caspar W. Weinberger in the wake of hearings last week involving Cleveland-based TRW.

Last December, TRW said it had identified $2.5 million in overcharges to the federal government on defense contracts. It returned the money, disciplined 12 management workers and fired two men. A TRW spokesman said last week that the company estimates it will owe the government between $10 million and $23 million as a result of the mischarging.

During the hearings, Dingell and other panel members charged that TRW had restricted its internal investigation to lower-level employees and rewarded, through lavish bonuses and promotions, upper-level corporate officers who were responsible for the divisions engaged in the overcharging.

“In the face of malfeasance, misfeasance and nonfeasance which emerged at those hearings, the level of executive compensation at TRW and all of the defense contractors that have been examined by the subcommittee is indefensible,” Dingell said in his letter to Weinberger.

“When the taxpayers are underwriting a significant portion of the executive compensation, based on the percent of government work, salaries that beggar a cabinet officer’s seem unreasonably bloated,” he said.

Dingell said taxpayers underwrite about 50% of TRW Chairman Ruben Mettler’s annual $1-million salary and that last year Mettler was awarded a $385,000 bonus, half of which was funded by taxpayers.

The congressman said the panel’s investigation of General Dynamics disclosed “equally bloated salaries and lavish bonuses” and that a similar situation existed at Lockheed. In both cases, 90% of the costs were absorbed by taxpayers, he added.

Dingell also said 14 top TRW executives are guaranteed three years’ cash compensation plus their bonuses if the company is taken over by another corporation. Half of the cost of these “golden parachutes” would be charged to the taxpayers, Dingell added.