Iacocca’s Income Drops in ‘88--to $3.7 Million
Chrysler Corp. Chairman Lee A. Iacocca received about $3.7 million and future stock options from the nation’s third-largest auto maker last year, down from $17.9 million in 1987, according to the company’s proxy statement released Friday.
The main reason for the big decline was that Iacocca exercised far fewer stock options in 1988 than he did the previous year.
In 1987, Iacocca exercised $13.5 million worth of stock options, while stock options represented about $2.2 million of what Iacocca received in 1988.
His salary, benefits and earnings incentives for 1988 were only 1.7% less than what he received the previous year.
The proxy statement is being mailed to shareholders in advance of Chrysler’s annual meeting set for May 18 in San Francisco.
In a statement Friday, UAW President Owen Bieber and Vice President Marc Stepp, head of the union’s Chrysler Department, said the executive salaries “continue to send a message reflecting misplaced priorities.”
“There can be no possible justification for the excessive salaries, bonuses and receipts from stock transactions reported in today’s proxy statement,” Bieber and Stepp said in a prepared statement.
Other Statements Due
Last year, Stepp called the payments announced just before the union and the company sat down at the bargaining table “an incredible rip-off.”
Chrysler is the first of the Big Three auto makers to release its 1988 proxy statement. Ford Motor Co. is expected to release its statement next week, and General Motors Corp.’s is due after that.
The statement said Iacocca, 64, received about $1.47 million in salary and 1987 incentive payments, $2.2 million in stocks or stock options exercised and $12,000 in company contributions to a savings plan.
In addition, the statement said Iacocca will become eligible for several other stock option plans at the end of 1990 and 1991, when Iacocca’s current contract expires. Those options, if exercised, could bring him $18.1 million at the end of 1990 and another $630,000 at the end of 1991.
Chrysler Vice Chairman Gerald Greenwald, the likely successor to Iacocca, received $1.2 million in salary, benefits and stock options; Chrysler Motors Corp. Chairman Bennett Bidwell received $1.2 million; Chrysler Motors President Robert Lutz received $979,256, and Executive Vice President for Finance Robert Miller received $902,453, the proxy statement said.
In addition, the top five officers also received stock option rights, with various redemption values depending on the time the stock is held, to shares valued at $25.88 each. Iacocca received such options on 120,000 shares; Greenwald, 75,000; Bidwell and Lutz, 60,000; and Miller, 45,000.
Earnings Dip
Chrysler’s top 22 officers received $12.9 million in salaries, bonuses and incentives during 1988, an average of $584,760 each.
The company earned $1.05 billion in 1988, down from $1.29 billion the year before. By comparison, Ford reported $5.3 billion in profits last year, and GM said it earned $4.86 billion in 1988.
The UAW said in its statement that workers and consumers were losing patience with automobile company executives’ high compensation levels.
“Today, with domestic market share continuing to fall in the face of mounting import and transplant sales,” the statement said, “it is simply unconscionable to assume the kind of ‘business as usual’ posture reflected in the compensation awards disclosed today.”
The UAW said Iacocca’s salary worked out to a little more than $416 an hour, 29 times more than that of a typical assembler. Add on to that stock options and bonuses, the union said, and Iacocca’s salary rises to 119 times that of the assembler.
The UAW praised Chrysler’s cut-rate financing incentives designed to increase sales and its trade efforts in Washington. But it asked, “Why do they have such an enormous blind spot when it comes to their own affairs?”
