Wednesday, January 12, 2005
The Executive Compensation Thread Goes to the Detroit Auto Show
by Tom Bozzo
The potential value of a hit that could be attributed to his influence would be enormous. Knocking $2000 off the discount required to move a domestic-brand car in the quantities of the Chrysler 300, generally regarded as a hit (1), would increase profits by more than a quarter billion dollars. So it's quite possible he could earn his keep.
Lutz's record to date has been mixed at best, though. The largely successful design theme at Cadillac substantially predates his influence (2). The importation from Australia of a federalized Holden Monaro as the Pontiac GTO has been a disaster. Pontiac sedans minus the plastic strakes are still rental car material. A Buick LaCrosse pulled up next to us on the way home from brunch at Marigold Kitchen last Saturday and I was unmoved.
Still, there is a ray of hope yet for Lutz with, of all things, forthcoming Saturns. Saturn was conceived as GM's import-fighting division (3), but Suzanne's old SL1 always left me wondering why she hadn't just bought a Civic. Still, Lutz thinks he can get Honda Accord and VW Passat intenders to consider a Saturn Aura.
Amazingly, the Aura looks like a real car that may have power and comfort and other things Saturns have largely lacked to date, and might have a shot (maybe not so much in the large coastal cities) if it isn't messed up too much between the near-production concept shown at Detroit and what actually hits the streets.
One source reports that Lutz will, like most other GM executives, work without an employment contract after 2005. An interesting governance test for the GM directors will be how long of a grace period Lutz will have after 2005 if he doesn't actually manage to conjure a hit car by then.
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(1) The run rate for the 300 annualizes to around 140,000 units.
(2) The automotive gods help me for saying so, but if I had to choose between a Cadillac STS and a BMW E60 5-series, it would be a tough choice.
(3) Which role is mooted in large part by the detail that U.S.-assembled, foreign-brand cars like the Accord have nearly 100 percent domestic content.
GM Vice Chairman Robert Lutz receives approximately $6.5 million annually in salary and bonus, plus whatever incentive pay and other goodies his employment contract calls for. A famous car nut, he is paid to shake up the focus group centered product design culture at GM that begat the likes of the Pontiac Aztek. Could he be worth it?
The potential value of a hit that could be attributed to his influence would be enormous. Knocking $2000 off the discount required to move a domestic-brand car in the quantities of the Chrysler 300, generally regarded as a hit (1), would increase profits by more than a quarter billion dollars. So it's quite possible he could earn his keep.
Lutz's record to date has been mixed at best, though. The largely successful design theme at Cadillac substantially predates his influence (2). The importation from Australia of a federalized Holden Monaro as the Pontiac GTO has been a disaster. Pontiac sedans minus the plastic strakes are still rental car material. A Buick LaCrosse pulled up next to us on the way home from brunch at Marigold Kitchen last Saturday and I was unmoved.
Still, there is a ray of hope yet for Lutz with, of all things, forthcoming Saturns. Saturn was conceived as GM's import-fighting division (3), but Suzanne's old SL1 always left me wondering why she hadn't just bought a Civic. Still, Lutz thinks he can get Honda Accord and VW Passat intenders to consider a Saturn Aura.
Amazingly, the Aura looks like a real car that may have power and comfort and other things Saturns have largely lacked to date, and might have a shot (maybe not so much in the large coastal cities) if it isn't messed up too much between the near-production concept shown at Detroit and what actually hits the streets.
One source reports that Lutz will, like most other GM executives, work without an employment contract after 2005. An interesting governance test for the GM directors will be how long of a grace period Lutz will have after 2005 if he doesn't actually manage to conjure a hit car by then.
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(1) The run rate for the 300 annualizes to around 140,000 units.
(2) The automotive gods help me for saying so, but if I had to choose between a Cadillac STS and a BMW E60 5-series, it would be a tough choice.
(3) Which role is mooted in large part by the detail that U.S.-assembled, foreign-brand cars like the Accord have nearly 100 percent domestic content.
