Iacocca Paid $20 Million by Chrysler in ’86
Chrysler Chairman Lee A. Iacocca, perhaps America’s best known and most popular business executive, got the pay to match his celebrity status in 1986, Chrysler revealed Friday. The 62-year-old Iacocca made a total of $20,577,491 in salary, stock and bonuses last year, making him one of the highest paid corporate leaders in history.
Iacocca, who is widely credited with bringing Chrysler back from the brink of collapse in the early 1980s, and with turning the No. 3 auto maker into one of the most efficient manufacturers in the country, made nearly twice as much as he did in 1985.
Iacocca’s pay package included $727,972 in base salary, which was up 9% from the previous year, and $975,000 in the form of a cash bonus, which was 3% larger than his 1985 bonus, Chrysler reported in its proxy statement Friday. In addition, Iacocca received $35,000 from the company’s contribution to its employee savings plan.
But the really big bucks came to Iacocca in the form of stock and stock options. Iacocca exercised options to buy Chrysler stock last year that were worth $9,558,912.
Most dramatically, Iacocca also received an outright grant of another 337,500 Chrysler shares. Under the provisions of his 1983 contract with the company, Iacocca was to receive those shares as a gift if he was still chairman of the firm in November, 1986. The market value of those shares in November totaled $9,280,607, double their value in 1983, when his contract was awarded.
Of course, Iacocca has other sources of income besides his paycheck.
The royalties from his best-selling autobiography, “Iacocca,” have totaled in the millions, all of which he has donated to charity. He also is now involved in Florida real estate investments with his friend, New York developer Donald Trump. He even has an Italian estate that began in 1985 to export Iacocca’s own wine to the United States under the label “Villa Nicola,” a red table wine from Tuscany named after Iacocca’s father, an Italian immigrant.
$11.2 Million in 1985
This also is not the first year that Iacocca has been handsomely paid by Chrysler. In 1985, Iacocca made a total of $11.2 million from his salary, cash bonuses and stock options that he exercised during the year.
Chrysler officials say Iacocca has more than earned his keep, by steering the firm through its darkest hours and by providing priceless name recognition among car buyers, who have often purchased Chrysler cars on the strength of Iacocca’s personal appeals on television advertisements. Indeed, Iacocca’s identification with Chrysler in the public’s mind has been crucial to the company’s ability to win back the credibility it lost in the 1970s.
“How much was it worth to Chrysler to know that Iacocca would stay for three years?” asks Chrysler spokesman John Guiniven, referring to the 1983 contract that gave him the huge block of stock only if he was still with the firm in 1986.
Gamble Pays Off
Guiniven also notes that Iacocca is simply reaping the rewards of his willingness, early in his tenure at Chrysler, to gamble on the company’s stock.
After all, he notes, the stock traded for as little as $3 per share during Chrysler’s financial crisis. By accepting stock and options while passing up the potential for a higher annual salary, Iacocca hit the jackpot; from its recession low of $3, Chrysler’s stock now trades at about $35 per share, even after two three-for-two splits.
Still, even during Chrysler’s bleakest days in the late 1970s and early 1980s, it made sure that Iacocca never felt much of a financial pinch.
Although he received enormous publicity in 1979 for agreeing to work at Chrysler for $1 a year while the company was seeking a federal bailout, Chrysler was still paying him $1.5 million annually as reimbursement for deferred incentive pay he forfeited when he left Ford Motor Co. and came to cross-town rival Chrysler.
Even at more than $20 million a year, Iacocca is still not the highest paid American executive ever; at least three others have had fatter paychecks in recent years.
Federal Express Chairman Frederick W. Smith apparently took the top honors in 1982, when he received $51.5 million in salary, bonus and exercised stock options; Toys R Us Chairman Charles P. Lazarus made $43.8 million in the same year, and corporate raider T. Boone Pickens got $22.82 million from his firm, Mesa Petroleum, in 1984.
