Two costly UAW strikes last summer hit General Motors' top brass where it hurts: in their wallets.
However, four of GM's five top officers still made more money in 1998 than in 1997 because of stock options.
Not counting those stock options, each of GM's top five executives received less money last year than in 1997.
According to the company's proxy statement, the board cut executive bonuses after GM failed to meet the board's targets for net income, return on net assets and quality.
The 54-day shutdown stopped most of GM's North American production and cost the company about $2.5 billion in net income.
GM failed to gain a 12.5 percent return on net assets, a financial yardstick that indicates how much a company earns on each dollar of assets used in the business. GM declined to indicate its targets for quality and net income.
LESS ... BUT MORE
Despite lower bonuses, four of GM's top five officers still received more overall compensation by exercising stock options that had been granted in previous years.
Chairman Jack Smith received $8.8 million in salary, bonuses, stock options and other income. That is about $1.5 million more than in 1997, although it does not put Smith in the same neighborhood as his peers at Ford Motor Co.
In 1998, Alex Trotman, who was Ford chairman through December, earned $69.1 million in total compensation. Trotman's huge paycheck was fueled by stock options, bonuses and incentives reflecting the big runup in Ford's stock price.
Robert Eaton, the former chairman of Chrysler Corp., also had a big payday when his company merged with Daimler-Benz AG. However, DaimlerChrysler has not released a proxy statement detailing Eaton's compensation. As a German company, it does not have to.
At GM, Smith's colleagues relied on stock options to boost compensation. Vice Chairman Harry Pearce received $3.5 million, up from $2.8 million in 1997.
President Rick Wagoner received nearly $2.6 million, up slightly from $2.5 million in 1997.
J.T. Battenberg III, chairman of soon-to-be-independent Delphi Automotive Systems, received $4.0 million last year, when he was also executive vice president of GM. That was up from $3.2 million in 1997.
Executive Vice President Lou Hughes, formerly in charge of GM's international operations, was the only top GM executive whose total compensation declined. He received $3.7 million, down from $3.9 million.
LINK TO PERFORMANCE
In recent years, GM's board has tried to tie the compensation of its executives more closely to the company's financial performance. The board also has asked its executives to buy more stock.
For example, Smith is expected to own GM stock worth five times his annual base salary of $2.0 million, while the company's executive vice presidents are expected to own stock worth four times their base salaries.
According to the proxy, the executives have met their stock ownership goals.
The board's obvious intent: If GM's stock price suffers, so will its executives.