Wagoner cries all the way to the bank
posted at 2:46 pm on March 30, 2009 by Ed Morrissey
I guess Barack Obama really showed Rick Wagoner who’s boss. By forcing GM to cut Wagoner loose as a condition of getting more subsidies, Obama triggered Wagoner’s golden parachute. GM gets to pay Wagoner a fortune for not working as a result:
Rick Wagoner will leave his post as CEO of bailed-out General Motors with a $20 million retirement package, the company’s financial filings show.
Although the Treasury Department has barred GM from paying severance to Wagoner or any other senior executive, Wagoner is eligible to collect millions in retirement benefits from his former employer, according to the documents reviewed by ABC News.
The Obama administration asked for Wagoner to resign Sunday, as part of its restructuring of the auto industry. President Obama said this morning that forcing Wagoner out indicated it was a time for new leadership.
There may have been good reasons to jettison Wagoner. His inexplicable decision to take a private jet to DC in order to beg Congress for a handout would be one of them, certainly, as would the general financial condition of GM. Wagoner’s presence hasn’t done much to turn around the automaker, and the company may — or may not — do better under different leadership.
However, by forcing Wagoner out, Obama gets the blame for additional costs that GM would not have had to incur. Rather than demote him, Obama demanded his resignation, triggering his retirement benefits. GM will have to shell out a fortune to Wagoner while negotiating concurrent payments to whomever is foolish enough to follow in Wagoner’s footsteps.
Expect a new round of outrageously outraged outrage on Capitol Hill and in the media over the terms of Wagoner’s retirement benefits. If the federal government didn’t like the contractual obligations into which GM entered, though, perhaps it should have refrained from investing in the company at all and allowing them to declare bankruptcy from the very beginning.
Update: A couple of commenters claim that ABC got this story wrong and that Wagoner isn’t due any severance, and point to the reporting in this WaPo article from last night. Read it carefully, though:
Wagoner’s resignation does not mean that he will leave the company immediately. He will continue to draw his $1 annual salary, because if he leaves the company he is entitled to a multimillion-dollar pension that the government does not want to pay, a source familiar with the matter said.
ABC didn’t report it as a “severance package,” and GM is on the hook to pay his already-negotiated retirement benefits — unless they can clear them in a bankruptcy proceeding (which is doubtful for pensions), but which will also void the union’s contracts at the same time. If he’s resigning, they’re going to have to pay those benefits, and probably sooner rather than later, and the White House can’t do anything about it.