Tales from the Trail

Shocker: Fat cat CEOs fly on private jets!

November 19, 2008

Congress is taking a hard look at Detroit’s autos these days. But what about Detroit’s jets?

When the chief executives of Ford and General Motors flew in to Washington yesterday to ask Congress for a $25 billion lifeline, they didn’t fly coach.

General Motors CEO Rick Wagoner arrived on his company’s cushy Gulfstream IV, ABC News reported. Ford CEO Alan Mulally flew in on a private company jet as well.

It costs about $20,000 to fly one of these jets round trip from Detroit to Chicago — far more than the $900 cost of a first-class ticket on Northwest Airlines, ABC said.

Wagoner told ABC he took the private jet because he’s a busy guy. Mulally declined to comment.

It’s not exactly news that corporate fat cats prefer to fly in style. And assuming all eight seats on the G4 were taken, the private jet only cost about $13,000 more than flying commercial.

But it might not be the best move by Big Auto as it tries to convince Congress that a $25 billion bailout would be money well spent. The two have already been criticized for their generous pay packages ($22 million for Mulally in 2007, $15.7 million for Wagoner).

What do you think? Is this a tempest in a teapot, or further evidence of Detroit’s poor business practices?

For more Reuters political news, click here.

Photo: REUTERS/Kevin Lamarque (Auto industry leaders testify in Senate on Nov. 18)

Comments
64 comments so far | RSS Comments RSS

Truly, yet another example of executives receiving grossly inflated pay and perks for mismanaging their companies.

Posted by David | Report as abusive
 

No bailout should be given out to the auto industry nor the banks. Generating money out of thin air and throwing it at failing businesses will only prolong the inevitable. American industry needs to stop outsourcing, reinvest in the worker and American ingenuity, and fire and hold accountable crooked execs and their bloated excesses.

Posted by Walker Stemmons | Report as abusive
 

Why don’t they just give the people with little money to just buy a car from one of the Big three and turn in there old one’s.I see it could help jump start some if not all three of the big three.

Posted by August | Report as abusive
 

I don’t know how these arrogant CEO’s and their
colleagues can sleep at night regarding their
greed and disrespect for the common folks. These
are the folks who have supported the automakers
by purchasing their products. Now these same folks are loosing their homes and vehicles.

Of course, I am sure that these top execs could care less
about anyone but themselves. Mallaly lives in
Seattle and commutes to his job each week by
private jet. How sad — such greed, such a disgrace!

Posted by Judith | Report as abusive
 

The private jet situation cuts to the core of the problem with Detroit. So does the CAW and UAW announcement today that they have no intention of giving up any pay or compensation to alleviate a crisis of their own doing. While the Detroit executives pad their wallets and sip champagne on their private jets, compare this to the CEO of Japan Air Lines. Until JAL gets out of financial difficulty the CEO is eating in the cafeteria with the workers, got rid of his company car and bought a used Toyota, and reduced his pay to $1 a year. Quite a difference from the pigs at the trough we have here in America — who deserve nothing. Let Detroit go bankrupt. Why should we taxpayers support their arrogance and incompetence? It will NEVER change.

Posted by turismo | Report as abusive
 

What else would you expect, these guys don’t have a clue. Trim the fat, cut the salary, bonuses, and perks before they can even get an audience to ask for taxpayer money!

Posted by Doug | Report as abusive
 

Considering that at 22 mil, he makes over $10,500 an hour, it is far cheaper for the company to use the private jet. It would take many more hours to fly commercialy than from thier corp jet. The press knows this, the reporter is just trying to stir you up.

Posted by Russ | Report as abusive
 

If the fat cats get bailed out, I will never buy a car from the big three ever again. They can stuff it as far as I am concerned and that goes for their union reps too.

Posted by John | Report as abusive
 

Planned obsolescence has finally rendered the big 3 obsolete. I think I’ll buy a Japanese product next time, you know, something I can count on.

sjb

Posted by Steven J. Beto | Report as abusive
 

Just another day in the life of the super rich. “I’m a busy guy,” says Wagoner. WE ARE ALL “BUSY GUYS!” None of us really have the luxury of time to waste hours in an airport.
I guess Mr. Wagoner had to make sure he didn’t miss out on his lunch of foie gras and beluga caviar, by sitting in an airport terminal for 2 hours.

These guys are asking you and I, who can barely afford the groceries to feed our families each week to subsidize their stupidity.

First, all of these executives should be fired, and all of the pay that they have been ‘given’ during each of their unprofitable quarters should be seized.

Then, the UAW should be broken up. They have a corrupting influence over the whole process.

Then each Senator and Representative for Michigan should be expelled from congress, and new Congressmen should be elected, because the ones they have now are squarely in the pockets of the Auto Industry.

After that, maybe we can talk about loaning GM, Ford, and Chrysler some money. But it should be at about the 25% range that companies such as GMAC charge their credit card customers.

Taxpayers say no to bailouts!!!

Posted by Keith | Report as abusive
 

Just another example that those at the top exist in a different reality, trickle down like hell.

Posted by Tyler Mucklow | Report as abusive
 

I think that they should be allowed to go bankrupt. “We the people” are so disgusted with greedy arrogant bloated white guys and their assumed entitlement. If the failure of these companies can shake these leeches loose from draining the faith of the street in our economy then we may have a chance at a rebound. The return to health of our economy would benefit from the surgical removal of the most malignant cancerous parts of Corporate America; if you can even call it that anymore; it’s more like Corporate Greed. The sad reality is that this endemic corruption is now so rampant that our economic strength has been reduced to swiss cheese. We criticize and look down on countries like Mexico for being corrupt; when in fact, they could learn what true institutionalize corruption is really all about if they did a quick study right here in the good ole USA. I say….”Off With Their Heads!!!” Sincerely yours, Martha Keats

 

These fatcat imbeciles have no business getting any public money. They’ve sorely mismanaged their respective companies and deserve to take it right on the chin. Mulally is only now talking about taking Ford into the 21st Century. My gosh, Ford Motor Company should have been doing this in the latter half of the 1990s. These executives are out of touch, they’re not up to the task of looking after anything but their own portfolios, and I believe are interested only in feathering their own nests. They say the economic downturn that’s frozen up the credit market was unforeseen? Not by a long-shot. Surely these execs have the cash to subscribe to http://www.trendsresearch.com/index.htm. If they had, they would have known about this a least a year ago, and they could have planned for it.

Posted by Art | Report as abusive
 

There are businesses all around our city that are failing that have taken the right steps through the years. Where is there bailout? It is pretty sick that the big three have made huge mistakes and continue to do so as they please. Then they get rewarded with a bailout. This is the reason I have not purchased a big three automobile in the past 5 years, and will not do so in the future. Bailout the failure. Way to teach the future of America.

Posted by Robert | Report as abusive
 

In this post 9-11 America another consideration they travel on private corp jets is executive protection/security concerns I would image. Of course you wouldn’t expect Rick Wagoner to mention that reason when he is glibbily asked the question by the MSM.

Posted by arline carmicheal | Report as abusive
 

We should do to the Big 3 what the World Bank does to 3rd world countries when they are dumb enough to borrow from the World Bank. We should make them “Structually Re-adjust” that is to make them miserable for taking the money. These 3 failures should be sent packing and all executives should be paid on the U.S. Governments pay scale. If they don’t except the terms then they should go home empty handed.
Where is the Money for this Bail Out coming from anyway, I keep hearing I’m getting a tax cut. LMAO

Posted by Tarro | Report as abusive
 

it’s not about jets!
These men should know, they need to earn the confidence of the public with example and product.
No one made the connection!
Sounds like they should be walking home.
Craig

Posted by Craig | Report as abusive
 

Again, the infuriating part of all of this is that we are re-hashing the same set of arguments about bailing out the automotive industry that we had with the banking industry. The primary difference in the decision seems to be that Congress prefers to bail out Wall Street and the upper class, rather than working class industry.

Posted by Jim | Report as abusive
 

Here we go again… this “fat cat jet” stuff is just too easy to pick up and run with. I don\’t make it a habit to defend the out of date, Detroit mindset; but if I owned the company and a group of top execs were flying somewhere, I would want them to be in touch, and working during the flight, instead of at least a half day of downtime flying commercial requires. Add in the security situation, and no “papparazi scenes” at the airport, and it’s money well spent.

Posted by Jared | Report as abusive
 

The problem is that most of congress flies around on private jets as well. Mostly paid for by lobbyists. Just job security for pilots like myself.

Posted by Scott | Report as abusive
 

These guys are either too stupid to realize the message they’re sending, or too arrogant to care.

The three of them should have just piled into the Edsel and driven down to D.C….

Posted by John | Report as abusive
 

CEO pay and Corporate executive pays/bonus should be highly regulated or there should be a government law imposed on their amount. Also there should be law of severe punishment and cut down of their bonus and payment in cases of company fail to performance due to their stupid act. This ridiculous amount of money as salary and benefit package should be trimmed down to reasonable amount. It is true that our so called big politicians are not willing to do that as they get their most of their political campaign money backed by this money hungry CEO. Its really a matter of regret that we live in a democracy where an average worker wage and a CEO wage/benefit difference is completely non-democratic process.

Posted by kalyan | Report as abusive
 

These guys need reality checks! Maybe if they scale back their lives and live on $40,000- $60,000 a year their employees make (if even that)and pay more for health care
and deductibles they would appreciate the “middle class struggle” Alot of traveling employees are supposed to be thankful for coach, $30 a day meal allowance and a discounted hotel. these guys need to cut back their lifestyles and alot of their pay, incentives etc. before they ask employees to give up any more!!

 

Of course they are completely out-of-touch with how the rest of us “formerly of the middle-class” are now forced to live (hand to mouth, a “working retirement”, shaky health care access etc.) Pelosi might as well light a bonfire with bucks as donate them to the Big Three.

How about a tax-credit instead, to Americans who purchase a new car of any make, where the credit is rated according to the car’s cost and the proportion of the manufacturing (in dollars) that was completed in the USA. If they can’t compete with Toyota, Honda and Hyundai then good riddance.

Posted by DB Lazof | Report as abusive
 

i can’t believe how jaded ABC news is:

“It costs about $20,000 to fly one of these jets round trip from Detroit to Chicago — far more than the $900 cost of a first-class ticket on Northwest Airlines, ABC said. ”

why do they have to fly first class? why can’t they fly coach like all the other people who are struggling in this economy.

Posted by Mike G | Report as abusive
 

Before the first cost-cutting measure is implemented, before the first worker is laid-off (made redundant), upper management must refund their 2007 bonuses and agree to forego that for 2008, on penalty of sacrificing their jobs and possible civil action.

Posted by David M. Miller | Report as abusive
 

I agree with “Tarro”. Give them money, make them restructure (which includes getting rid of current CEO’s or making their pay depend on how well the company does). The whole thing about fat cats flying is silly thing to cry about in capitalist society. If they are getting paid as much as they do, you do really want them to fly private so they don’t waste their time. And if shareholders agreed to hire them for that much, then they must be worth the buck. But if after all that they want public money, their salaries should be affected as well.

Posted by woland | Report as abusive
 

This is sick! Those three guys must be fired before the senate can even considet a bailout package.

Posted by Oscar | Report as abusive
 

JOIN THE CHAPTER 11 CLUB, BOYS. THESE BUSINESSES ARE BADLY IN NEED OF TOTAL REORGANIZATON!

Posted by John H Lindop | Report as abusive
 

Isn’t that about the same as someone paying with foodstamps and then packing groceries in a Cadillac? Maybe people can stop just looking at the Auto Makers in this situation and realize it also happens in your town just at a lower level.

Posted by Patrick | Report as abusive
 

Real minor stuff, funny but not material

Posted by Scott | Report as abusive
 

This is no tempest in a teapot. This is politics/governing American style that is fast going out of style. See London Review of Books, http://www.lrb.co.uk/v30/n21/mish01_.htm l. So yesterday.

 

As elitist as flying in private jets sounds, Scott is correct! Pilots, ground crews, fueling personnel, etc. jobs depend on these corporate jets being used. My father was corporate pilot when I was growing up. I can not count how many times we had to move for my father to take another job because when a business begins to hurt financially, the aircraft is the first to go. Everything always rolls down hill hurting everyone!

Posted by leslie | Report as abusive
 

OK–to those of you citing “safety” and keeping the “paps” away–when is the last time the paps chased down the CEO of Ford for a candid? Answer: never. As for safety, if commercial airlines are not “safe” why is anyone flying? These guys are not celebrities nor are they targets for violence…they should fly commercial like the rest of us peasants.

Posted by Rox | Report as abusive
 

Martha Keats: “greedy arrogant bloated white guys”
You might want to rethink your wording. As is this comment could easily be construed as racist.

Posted by Jordan | Report as abusive
 

Private jets are a fact of life for highly paid and busy individuals. But why not consider a couple of options instead of bailing out the auto industry. Lower tax rates to 5%, 10%, 15%, 25%, 30%,and 35%. Then drop welfare so everyone works for there check, but increase grants for non-profit orgs that make an impact for those groups. Follow that up by increasing taxes on the entertainment industry, which pays multi-million dollar contracts for throwing a ball around or staring in a movie. I would definitely still play professional basketball if I only made 100k per year. Now there is a stimulus package.

Posted by StreaminJA | Report as abusive
 

Scott, many disagree with you. This really is much more than “minor stuff.” Leading by example is a large part of character. Wagoner’s compensation package includes a base pay of $3.36 million. The moment he and the boys announce that they will substantially cut their pay as a start to GM’s financial viability is the moment I and others might begin to back thier plea and plan.

Posted by russ | Report as abusive
 

The auto spokespeople try to argue that commercial airline travel is too insecure. Bogus..certain celebrities do this and they are far more recognizable than these guys. These execs are so out of touch, that they couldn’t imagine being in the vicinity of “the people”..even first-class people.

The bailed-out banks are probably no different, but they own the media so don’t expect to see those headlines.

Posted by AJ Wright | Report as abusive
 

Haven’t we as individual taxpayers been bamboozled to the tune of $700 Billon? No more bailouts!

Posted by PC | Report as abusive
 

Diane – the average total compensation for a UAW line worker at any of the “Big 3″ is over $140,000 annually, and includes the company’s contribution to healthcare and other benefits…a little more than the $40-60,000 you suggest.

Kalyan, compensation should only be regulated by the government if the company has taken advantage of government assistance. In this case, if they do in fact receive federal funds, I think there should be strings attached with regard to executive compensation and Union wages. If not, then let the shareholders and board (and free market) make those decision, and own responsibility for the result – good or bad.

Posted by Sloan | Report as abusive
 

Really shows how out of touch the CEO’s truly are with the pain of their everyday workers. They cry they will be out of money, yet when asked for specific details and time frame. None would provide. Let them forego their bonuses, reduce their salary, let them fly commerical like the rest, make the employees part owners in the compnaies and provide oversight. I can bet the expenses would come down. Let these fat cats start trying to care for their families on $50,000 or less a year. Not just the auto industry but all segments of US – lets bring things on a more balanced playing field. Instead companies outsource manufacturing to China so the big whigs can keep rolling in the dough.

 

any one who thinks that the auto,s will not get a bail out is not living in the reality of the 21st century.how many of the congress started their political careers via the trade union movement?ask dick durban.how much trade union funds were donated in the last presidential election?how many lobbyist do you think the auto industry has?if you think congress will not hand out wake up.

Posted by brian lee | Report as abusive
 

If these guys were serious about wanting the American People to believe them, you know what they should have done — DROVE! Yeah, how about getting in one of your best most fuel efficient vehicles and driving down from Detroit even if it took an overnight ride just to show people that you actually believe in your product? How about taking an Equinox and using hydrogen to power the trip…even if you have to drive a diesel full of hydrogen along side it…it would be worth the publicity! Imagine 3 CEOs from Detroit, “Road Tripping”, eating at funky diners, “mooning” people in Priuses as they ride I-80 to the East Coast.

Posted by John Bailo | Report as abusive
 

First off, I say give them the bailout— but let it be made clear that if we as taxpayers have to sacrifice OUR money to bail THEM out, they are going to have to sacrifice too.

First: lower pay for CEO’s. Who really needs to make that much money? and clearly, they are not worth what they’re getting paid since they couldn’t handle their business and now they are begging for more.

Second: Give up the private jets. I sincerely doubt that you have that many spur-of-the-moment meetings taht you can’t plan a flight a day ahead of time.

Third: Let it be clear that it is a LOAN from the American taxpayers, and we expect it back WITH INTEREST.

Maybe if the Big 3 built quality cars that Americans felt we could trust, we wouldn’t mind dropping $30,000 (a year’s pay for some of us, 3 hours “work” for some of them) on a car, and they wouldn’t be in the mess they’re in now.

Posted by Christina | Report as abusive
 

Private jets? 22 million dollar salaries for CEO’s that can’t even manage a company? This is the same story with every business in the US (Banks included).And we wonder why our country is in such a mess. Tell you what, give them a $100,000 salary (Which I would love to have) and a percentage of the profit that the company makes (If they do) for their salary. I guarantee that they will all of a sudden start making profits. Everyone working in the US should have accountability for their work!

Posted by Mark | Report as abusive
 

Double their executive salaries – but let them pay tax on it and let them pay for all their expenses – the trips, jets, lunches, cars etc. just like the man in the street, and see how their behaviour changes. The scheme should be good for politicians as well. We will have way lower taxes!

I suggest we call it “the new deal”

Posted by Gerhard | Report as abusive
 

No more free money or bailouts. The auto industry has been mismanaged for many years. Let them go bankrupt and work to reestablish good management and products I am retired and disabled and manage to pay my bills, repay loans and live a modest life. No one has offered to forgive my debts.

Posted by r. murphy | Report as abusive
 

@woland:

“And if shareholders agreed to hire them for that much, then they must be worth the buck.”

Obviously they’re not worth the buck if they are on the hill asking for money. If they were worth the buck, they would be running a business the way a business is run at a lower level. Yes, that means getting rid of the corporate jets. Yes, that means making concessions.

When times are hard, it’s difficult to ask for something without giving anything up. The amount of jobs that would be lost if any of the Big Three were to go the way of the dodo should not be justifiable. The fact is the CEO’s, the shareholders, and the line workers making $140,000 are to blame. The fat needs to be cut before any consideration is made to bail them out.

Posted by Joh | Report as abusive
 

Apparently Mr. Frugal himself, Warren Buffet, agonized for years before he bought his private jet. His name for it is “Indefensible”. He finally gave in when his fame and recognizability made it really difficult to use commercial flights.
These guys are not as recognizable but still. . . They are all from Detroit. It would have been good PR if they had at least made a token effort and shared one private jet rather than each using his own!
These fat cats are so out of touch. The gap between executive and worker pay is obscene and the perks just rub everyone’s noses in it.
When millions are losing their jobs, there should be no taxpayer help for anyone unless they demonstrate serious belt-tightening of their own!!

Posted by be_tough | Report as abusive
 

After being Sold a Bill Of Goods Over the 700 Billion Dollar Bail Out Of Wall Street. It is Simply Absurd To Even Question Helping The American Auto Industry.
Nothing Has Changed, Financial Markets are if anything even more restrictive now than before…The Lobyists are circling like the Vultures They Are. And All Our Politicical Leaders have to talk about IS A PRIVATE JET! Did any Body Ask A.I.G Or Goldman To Sell Their PRIVATE JETS.
WALL STREET NOT MAIN STREET…AND YES…JUST MORE OF THE SAME!

Posted by Joe Vlasek | Report as abusive
 

this is noting just wait till you see what other surprises awaits you

Posted by jess | Report as abusive
 

I thought it could be only in Brooklyn. Over there, it’s something proverbial: A Mercedes stops (double-parks) at a food store, a lady in mink and Prada heels steps out, buys some high end products (caviar?) and pays with food stamps. But arriving at the welfare office (what else is Congress these days if not a huge welfare doling out unearned and most of the time undeserved handouts?), benefit application in hand, by private jet? Looks like human audacity has no limits…

Posted by Anonymous | Report as abusive
 

The use of the jets is more an indication of their “tone deafness”, and would be a subtle reinforcement of the judgment that this “tone deafness” was part of their charmed, narrow inner circle view of infallibility vis a vis market share, energy conservation policy, etc. So, its not the actual flying on the jets, but the evidence thus provided of their chronic failure to operate from wider perspectives. That’s called, I think, lack of OBJECTIVITY.

 

How about paying the CIOs’ and top managements’ a modest salary just like the worker-bees and any other remuneration / benefits handed out five years after their retirement from that job (just like social security after retirement). Hopefully, then we won’t have schmucks like these.

Posted by Larry | Report as abusive
 

Rick had to buy back my brand new Cadillac because it was a lemon. He could have driven that car to D.C., however, there’s a chance he wouldn’t have made it beyond Toledo before the Check Engine light came on…

Posted by Kevin Riley | Report as abusive
 

sloan where do you work? and where did you get your information at.

 

When those “Financial Masters of the Universe” pull their head out of their bum, cut their operating costs (ie salaries) from the top all the way down, and develope a business plan that actually shows them running at a profit….then give them some help. But not until then.

Posted by kozette | Report as abusive
 

While the CEO’s made a mistake in the jets, it is rather ironic that the Senators and Congress people would complain. It was just two years ago that Nancy Pelosi thru a public fit that the plane the government gave her as the Speaker of the House was only a Gulfstream sized plan. She demanded and go a Boeing 757!

Posted by ARF | Report as abusive
 

What happened to capitalism? The principle is that weakness loses and strength sustains. If the companies fail those that replace them will be stronger and better suited to the needs of the market.

Posted by jason | Report as abusive
 

what you fail to realize is that this isnt in any aspect about these dumb over the top cocky arrogant CEO’s its about you and me. about us hard working americans that are working our butts off but still cant afford a home. the problem is to big now to just let capitalism take its course and destroy these companies because when these companies fall where will we go to work??? the way i see it in the real world we have no choice but to rescue every single large organization that gets into trouble because it is the governments job to keep america strong and the millions of people in the auto industry help keep this country strong oh and dont forget they pay taxex too at least those taxes can do is save their jobs

Posted by Quincy | Report as abusive
 

BUSINESS 101 – This executive arrogance, and corporate demise, is actually only possible due to the BOARD of DIRECTORS, who are the REAL culprits. In a corporation like GM or Lehman the shareholders OWN the company. They paid good, hard cash to buy an ownership share of a corporation. The Board of Directors are SUPPOSED to represent shareholder interests, develop corporate strategy and direct the Executive who implement their directive. This is why the Board MUST be approved by the shareholders. What is actually happening is that the Executive are nominating a slate of collaborating Directors, which the shareholders trustingly approve, but then the Directors give the Executive everything they want – airplane, extravagant pay, undeserved bonuses, and more. In EVERY case, in both the financial industry and the automotive industry, the DIRECTORS SHOULD BE PERSONALLY SUED and MADE LIABLE for BREACHING THEIR FIDUCIARY RESPONSIBILITY to the SHAREHOLDERS. Had they been doing their job of protecting the shareholders investment and corporate value, by firing grossly incompetent executive, the situation would not be so dire. The BOARD of DIRECTORS should be in the news more than the executives, and shareholders should initiate a class action claim against them personally. Thats the ONLY way pandemic corporate mis-governance will stop.

Posted by turista | Report as abusive
 

TEMPEST IN A TEAPOT. All big companies — and countries — fly their execs around. It is much more time- and cost-efficient than flying commercial. If we constrained the CEOs to commercial airlines, they businesses would suffer in global competition. People, please grow up.

Posted by Don in CA | Report as abusive
 

Of course the Big Three CEOs have to fly in private jets. It’s a matter of personal security. Imagine if they flew with the public – there would be hundreds of fellow travelers who would try to LYNCH them!

Posted by Josh G | Report as abusive
 

As the bailout money is continuing to pour into companies like Citigroup, a big news story has been about their use of private jets. President Obama has ordered Citigroup to cancel their 50 million dollar jet that was soon to be delivered. James Peragine at Privateaircharterjets.comhas said that private charter is actually up in the wake of the current economy and he attributes is to many aircraft owners making the switch to Private Charter instead as the sell of their aircraft.

Posted by Jim | Report as abusive
 

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