Chrysler wont hike exec pay indiscriminately as U.S. caps end, CEO says
Executive pay restrictions imposed by the federal government as part of Chrysler’s bailout have lifted with the company’s exit from U.S. ownership last week.
But CEO Sergio Marchionne says that does not mean the company will loosen the purse strings.
Assumptions that “we’re going to start distributing cash indiscriminately are probably misplaced,” Marchionne said July 26 on a conference call discussing Chrysler’s second quarter earnings with journalists and analysts.
The pay restrictions lifted on July 21 when Fiat acquired the government’s remaining 6 percent stake in Chrysler.
Chrysler was restricted from paying executives more than $500,000 as part of a 2009 rescue package financed by the U.S. Department of Treasury’s Troubled Asset Relief fund. General Motors Co. remains under similar restrictions as part of its government rescue.
“The compensation restrictions are all gone,” Marchionne said. Chrysler intends to “remain competitive” on compensation, but will stay in line with an industry trend toward more restraint on pay, he said.
Chrysler reported a net loss of $370 million during the second quarter compared to a $172 million loss during the period a year ago. The loss followed a profit of $116 million in the first quarter.
Chrysler incurred a charge of $551 million related to the final payment of U.S. Department of Treasury and Canadian loans that kept the automaker afloat in 2009.
“Modified” operating profit nearly tripled from a year earlier to $507 million, while revenue climbed 30 percent to $13.7 billion, the company said.