Mitsubishi to Come to Aid of Ailing Chrysler : Autos: Despite Lee Iacocca’s Japan-bashing, the U.S. firm’s venture partner reportedly will ante up $200 million of financial support.
Chrysler Chairman Lee A. Iacocca, who leads the U.S. auto industry’s campaign for protection from Japan, has reportedly persuaded Mitsubishi Motors Corp. to protect Chrysler’s flanks with an infusion of more than $200 million.
Meanwhile, company documents showed that Iacocca’s tightrope act atop the struggling U.S. auto maker helped him earn about $4.6 million last year--a 15% raise despite Crysler’s collapsing profit.
The Japanese newspaper Yomiuri reported Friday that Mitsubishi Motors, a longtime Chrysler partner, plans to “prop up” the struggling U.S. firm.
The financial support would total 30 billion yen, or about $222 million. It will be invested in a Chrysler-Mitsubishi joint venture called Diamond Star Motors that builds cars in Normal, Ill. But the newspaper portrayed the plan as “just a starter” and said there is a growing possibility that the Mitsubishi corporate group will give Chrysler direct financial support under a “rescue plan.”
Chrysler declined comment on the published report.
The newspaper said Mitsubishi would buy an additional $70 million worth of stock in Diamond Star Motors, presumably making it the majority partner.
Under the new joint venture plan, Mitsubishi would assume complete development costs on a new 1993-model car to be built at the Illinois plant, the newspaper said. These costs have been shared equally by the two firms.
And Mitsubishi would waive a royalty fee averaging $370 per car that Chrysler pays the Japanese firm for each vehicle it sells through its Plymouth and Jeep-Eagle dealers, the newspaper said.
The companies have said the next generation of cars to be produced in Illinois might use Chrysler-built engines to replace some of the Japanese-built ones used in the current products. Thus, Mitsubishi could be paying Chrysler’s own engine development costs.
Chrysler’s latest financial problems stem from the recession and other woes, especially Japanese competition. The troubles combined to drive the company’s earnings down 81% to $68 million last year.
But Iacocca got a raise last year. He received $918,182 in salary, $218,417 as a reward for surpassing a cost-cutting goal and about $3.4 million in stock awards, according to the company’s annual proxy statement to shareholders.
Though Chrysler didn’t earn enough money to trigger regular executive bonuses, the company found a way to reward executives for their contributions to a crash program to slash annual costs by $1 billion. The result was lump-sum payments totaling $1.6 million to 22 officers.
Chrysler also bought homes in Michigan and Florida from Iacocca for $1.7 million so he wouldn’t have to bother with realtors, the company said. The company has resold one property and is trying to sell the other.
But compared to recent years, Iacocca’s latest compensation is downright modest. He earned $18 million in 1987, for example.
Chrysler Corp. Profits
In billions of dollars
Includes long-term compensation such as stock options. In millions of dollars.
1980: ONE DOLLAR
* Includes 1st quarter of 1986 Source: Chrysler Corp.