Iacocca’s Pay, Like Chrysler, Takes a Tumble

Lee A. Iacocca, whose annual take-home pay has ranged from $1 to $18 million during his tenure as Chrysler Corp. chairman, saw his 1991 compensation tumble 35% from a year earlier as the auto maker recorded its worst financial performance in more than a decade.

In a proxy statement released Monday, Chrysler said Iacocca was paid $2.98 million last year in salary and stock awards. While his base salary was boosted 6.3% to $976,378, Iacocca received 45% less in stock awards than in 1990. He got no bonus for the second year in a row.

Stuck with an aging lineup of car and truck models and a nearly comatose U.S. vehicle market, Chrysler lost $795 million in 1991, its worst earnings record since its rescue by a federal bailout from a $1.7-billion loss in 1980.

Even so, executive compensation consultants said the cut in Iacocca’s total compensation was a positive step for a company widely criticized in recent years for paying its chairman far in excess of his performance level.

“Chrysler has been both a great example of the way it ought to work and the way it ought not to work,” said Gregory Reisinger, an executive pay expert at Sibson & Co. “This looks like a step back to recognizing that pay should go down when the performance isn’t there.”

Still, Iacocca’s reduced compensation package failed to soften the heart of shareholder Nick Rossi, whose father’s proposal to tie executive pay more closely to performance will be voted on at the company’s May shareholder’s meeting.

“Everybody’s taking it in the shorts and this guy is making millions,” said Rossi, who runs a hardware store with his father, Emil, in Boonville, Calif. “He should go back to making $1 a year.”

The U.S. auto companies have found themselves at the center of the national spotlight on executive pay levels during a time when they are announcing massive layoffs and losses. Chrysler was one of 10 companies recently ordered by the Securities and Exchange Commission to let shareholders vote on executive pay plans.

Although Iacocca did not exercise any of his existing stock options this year, he was awarded new options which, if exercised today, would have a value of $730,600. The options are priced well below the stock’s closing price Monday of $17.75 a share, up 50 cents in New York Stock Exchange trading.

Executive compensation experts frowned on this element of Iacocca’s compensation package, which is not counted as part of his 1991 pay.

“Stock options are supposed to be future-oriented,” Reisinger said. “For an individual who is leaving the organization, it begs the question as to why, after a year of less than great performance, you would grant him additional pay in the form of options.”